Changing Universities

UCR Students Promote a Bad Tuition Plan as Police Beat Protesters

2012-01-20T08:03:00.000-08:00

The UC Regents meeting had a little of everything this week: UCR students came up with a new way to fund the university, a long list of new salary increases was released , UCSF asked to quit the system, a retired professor was fired, protesters disrupted the meeting, Regents met behind closed doors, and police attacked protesters who were using books as shields.

What does it all mean? Perhaps, it all adds up to the demise of the modern Western social contract. Without being too dramatic, we are seeing an attempt to resist the destruction of the central institutions of modernity: the university, the public commons, and the welfare state. Although it was once taken for granted that everyone should sacrifice for the common public good, this social contract has been broken, and now some are fighting to maintain it, while others are pushing us forward to a more premodern mode of social organization.

A case in point is the UCR “Student Investment Proposal,” which argues that students should pay no tuition while they are in school, but once they graduate, they should pay 5% of their income for 20 years. At first, this appears to be an elegant solution, but it really represents the final privatization of the public university. Instead of relying on state and federal funds and a common tax base, the new system would rely on private citizens to fund their own education through the use of a non-progressive flat tax. Just as UCSF wants to break its ties with the state and the rest of the UC system, this new funding model would allow students to “pay for their own education,” and would get rid of messy things like financial aid and family contributions.

Under this neoliberal payment program, the students working at Starbucks would be paying the same percent of their income to the UC as the students working for hedge funds. Of course, the university would have a strong incentive to only accept wealthy students, since these students have the highest chance of earning a big paycheck in the future. Likewise, there would be no reason to support programs in the humanities and social sciences if the big earners will all go to law school, medical school, and business school. In short, the student proposal is a private solution to a public problem, and yet we are told that the Office of the President will take it seriously.

It is indeed telling that a student group has come up with such a regressive funding model. We can read this as a sign of the way the backlash against the public good has been so successful that even good-intentioned people present anti-social ideas as if they were progressive. While the program does insist that the state should spend 2% of its budget on the UC each year, it does not say how the UC should use this money. Instead, we are told that students will pay for their own education out of their own future earnings. Of course, this model assumes that these students will have a future income in a world where we no longer have any sense of the common good.

Biden and Romney Talk Higher Ed

2012-01-17T07:52:00.000-08:00

National politicians continue to speak about higher education from a perspective of almost total ignorance. In fact, Mitt Romney has actually argued that for-profit colleges are the solution for making higher education more affordable and accessible. Of course, Romney does not say that these schools have some of the highest tuitions and lowest graduate rates. As the New York Times points out, Romney may be influenced by the fact that he is receiving large campaign contributions from for-profit institutions. His position also connects with his belief that these schools represent the free market at its purest. Of course, what he ignores or does not know is that most of the funding for these schools comes from federal Pell Grants.

Even more scary is VP Joe Biden’s recent presentation on higher education. Based on his own experience as an adjunct law professor, he argues that the salaries of adjuncts are driving up the costs of higher education. This is wrong on so many levels that one wonders if there is any hope of having our political officials understand anything about the economics of higher ed.

As the President pushes his goal to have the United States regain its position as the country with the highest number of college graduates, all of our state and national policies are moving in the opposite direction. As I have discussed in regard to the reversal of the California Master Plan, what is happening is that as more students are being crowded out of community college and state universities, they are turning to high-cost, low-performing for-profit schools. The end result is that students are paying more and going into greater debt, but we are producing fewer degrees.

One possible solution is to have the federal government to take all of the money it is spending on for-profit schools and spend it on public universities. Another solution is to have the Fed bail out student debt and to move to a system where higher education is made free and universal. For a discussion of these issues, you can listen to a radio show in which I participated.

The University as Investment Bank and Questions about State Funding

2012-01-09T09:47:00.000-08:00

In response to my last blog entry on President Yudof and the current financing of the UC system, and anonymous commenter wrote the following: “This post is highly misleading. You are implying that UC takes contracts and grants, puts the money in STIP, then spends it elsewhere. This is simply not accurate. STIP interest, not the original funds, can be spent elsewhere. What would you have them do with a year of funding---keep it under the mattress until it is spent?” In response to this response, I would like to show how the UC and other universities have become investment banks.

I myself did not understand this system until I met with a high-ranking UC official to try to figure out how the UC was able to transfer $1 billion from the Short-Term Investment Pool (STIP) to the retirement system (UCRS). When I asked if the administration had borrowed the money from the different accounts that hold grant funds, operating cash, state funds, and tuition dollars, I was informed that I am looking at it in the wrong way. I was told that I should think of the university as a bank, and just like once you deposit money in a savings account, it does not just sit there, but it is invested in different things. This explanation reminded me of the famous scene from It’s a Wonderful Life, where Jimmy Stewart’s character tells the people trying to withdraw their money that their funds are not there because they have been lent out to help build their neighbor’s homes and businesses.

I am not implying here that the UC is doing something illegal; rather, my point is that the university has much more flexibility with its funds than it likes to admit. For example, last summer, the university suggested to the Regents the following financial strategies:
“• Transfer an additional $1 billion from the systemwide Short Term Investment Pool (STIP) into the Total Return Investment Pool (TRIP) to increase investment earnings;
• Distribute a two percent extraordinary payout on eligible year-end 2010-11 balances of funds functioning as endowments (FFEs);
• Distribute a two percent extraordinary payout on eligible year-end 2010-11 balances of true endowments; and
• Draw down as needed from the University’s employee/retiree healthcare reserve.”

The first strategy is to move $1 billion of funds from low-risk securities to higher risk investments. Once again, individual accounts are not reached into and taxed; instead, a portion of the pooled assets are transferred. The second two strategies do the same thing with the pooled endowments and other funds that function as endowments. Finally, the fourth strategy is to take money that is being held for retiree healthcare and use it for other purposes. (This final move should raise some concerns since retiree healthcare is not a vested right, and the UC plans to reduce the amount of healthcare it covers for retirees by making former employees pay more for their healthcare.)

What is so interesting about these financial transactions is that they do support my contention that the university could use grant money or medical revenue to support things like instruction if it saw this as a priority. However, from the university’s perspective, spending money on instruction means that the funds just disappear, but if money is used for other purposes, they could bring in more money in the future.

This financialized model has been hastened by the recent state reductions of UC funding. In fact, I believe that the governor’s latest budget plan is the worst one ever for the UC because not only does it lock in a long-term reduction of state funding, but it also gives the UC administration more leeway to use state funds in any way that they want. While some at UCOP have actually applauded this new budget as a positive gesture, the possible $300 million increase, which would be reduced by $200 million if the governor’s tax initiative does not pass, does nothing to return funding to the 2007-8 level of $3.2 billion. Instead, the UC would get $2.5 billion, in the best-case scenario, but would have to take on millions of dollars of debt financing.

While the UC claims that the new budget increases state funding by 4%, it really should be considered to be a 20% reduction from the past high. So why has UCOP reversed course and applauded something that they always in the past have attacked? Moreover, if the state increase is considered to be 4%, does that mean that tuition will have to go up 12% under the plan discussed last September? Also, since the state does suggest using $90 million to fund the retirement of state-supported employees, does this mean that the UC will have to follow any new state pension restrictions? Stay tuned.

My Dialogue with President Yudof

2012-01-04T09:46:00.000-08:00

On Dec. 2, 2011, UC President Mark Yudof gave a speech to the California Chamber of Commerce entitled, “A Baker’s Dozen Myths about Higher Education.” This presentation is classic Yudof, and it reveals the great disconnect between the UC administration and the facts on the ground. To analyze several of Yudof’s claims, I will quote his myths and explanations, and then respond to him in the form of a dialogue.

Yudof: The cost of producing UC degrees and credit hours has gone up over the last decade. I hear this myth all the time. And it’s frustrating, because this cost has actually dropped by more than 15%, in constant dollars, since the 1990s. This cost has dropped in part due to a broad range of system-wide efficiencies: common IT systems; reduced employee travel; thousands of unfilled faculty and staff positions; 1/3 fewer employees at the UC Office of the President; a higher student-faculty ratio, and so on.

Samuels: This claim is actually partially true: the money UC spends on undergraduate students has gone down, but that is mostly due to expanding class size, the use of inexpensive lecturers and graduate student instructors, and the elimination of many courses and class sections. What you do not say is that at the same time, the cost for graduate and professional education has gone up, and while there are fewer administrators at the Office of the President, there are more on the campuses. In fact, there are now more administrators than faculty members.

Yudof: Tuition goes up because the university is providing resort amenities to students. Perpetuators of this conspiracy theory are fiercely devoted to it. Rock climbing walls, manicured landscaping, gourmet dining halls—these and other examples are constantly cited as the real cause of higher tuition bills.

Samuels: This claim is also partially true, but it neglects to add that the cost of room, board, and other essentials, like books and computer use have also gone up. Moreover, UC can only construct its new buildings and amenities by promising to raise tuition on its bond submissions.

Yudof: Tuition goes up because state funding goes down. Plain and simple.

Samuels: However, if you look here at the history of UC tuition increases, you see that in the last twenty years, UC has increased tuition every year except twice. This means that tuition has gone up even when state funding has gone up.

Yudof: UC raises tuition as federal student loan caps are lifted. This purported practice isn’t just false. It’s flat-out illegal for UC and other non-profit universities.

Samuels: UC may not be simply raising tuition because the caps on federal loans are going up, but the system is able to increase tuition because students are willing to go into debt to pay for the increases.

Yudof: Tenure track faculty at UC do not teach undergraduates. Tenure track faculty members teach about 61% of all student credit hours at UC. And in fact, this percentage is up slightly in recent years as budget cuts forced campuses to reduce the ranks of lecturers, visitors, and other non-tenure track faculty.

Samuels: First of all the number of lecturers has gone up recently, and the UC is planning to increase its reliance on non-tenured faculty to reduce costs. Second, if tenured faculty teach 61%, then 39% of the courses are being taught by faculty who are not eligible for tenure. Third, UC refuses to track the number of courses and sections taught by graduate students, so they are not included in these statistics.

Yudof: The number of high-level administrators at UC is expanding. UC, we call our high-level administrators “senior management group” members, or SMGs. Rather than expand or remain constant, the number of SMGs has actually declined slightly. Last year, the number dropped from 315 to 293—which means they account for less than 1% of all full-time-equivalent personnel across the entire UC system.

Samuels: “The Senior Management Group (SMG) is only a small sector of the administration that now outnumbers the faculty. While you always concentrate on the senior managers, you ignore the cost of non-senior administrators on the campuses.

Yudof: Non-residents only make up 6.6% of UC undergraduate students system-wide. This is well below the percentage at most of the university’s public comparator campuses. At the University of Michigan, for example, non-residents comprise 35% of undergraduate students. At the University of Virginia, it’s about 30%.

Samuels: You are bending the truth to prove your argument. At all of the elite campuses, non-resident students have replaced students from California, and this trend is only growing. Currently, Berkeley has a target of 30% nonresident students and UCLA is shooting for 25%. UCSD and Davis also have ambitious plans to increase nonresident enrollments.

Yudof: Only the wealthy can afford to attend UC. Nothing belies this myth more than the incredible socioeconomic diversity of UC students. About 40% of all UC undergraduates receive Pell grants. Pell grant recipients come from families with an annual household income of $50,000 or less.

Samuels: The UC system does deserve high marks for making the university affordable to low-income students, but this has resulted in increased costs and decreased enrollments for middle-class students. As you yourself admit, “High tuition actually hurts the middle class much more than it does the poor. This is because high tuition enables institutions to employ a high fee/high financial aid model.” This just proves my previous point.

Yudof: myth #10: UC student debt is skyrocketing. At graduation, the average student loan debt of UC students is $16,795. This figure is almost $10,000 lower than the national average, which currently stands at $25,250. In fact, when adjusted for inflation, UC students’ debt load has remained virtually flat since 2006.

Samuels: Once again, the average debt is remaining flat, but the debt for middle-class students is going up.

Yudof: Corporate and alumni giving can replace all the core funding the legislature cuts from UC’s budget. Corporate and alumni giving is phenomenally important to UC. It played a critical role in the foundation, and the development, of this university. And throughout UC’s history, it has helped sustain the university during times of fiscal crisis—like the crisis we’re experiencing today. At the same time, most corporate and alumni giving is restricted—which means that if the state cuts our core funding, private giving can’t necessarily cover the gap.

Samuels: If the UC cannot use its donations to fund instructional programs, why is it spending so much money trying to raise these funds, and why in the past didn’t the university go on a campaign to raise money for educational purposes?

Yudof: $1 billion can be cut from UC’s budget with zero effect. This isn’t a myth. It’s a canard. I hear this fiction all the time. And I find it very troubling—extremely troubling. UC’s annual budget is roughly $20 billion. A $1 billion hole is hard to ignore on its own. But it’s more complicated than that. Much of our funding is restricted. Hospital revenue is restricted. Government grants and contracts are restricted. You can’t just take money from laser research and give it to a professor of Portuguese. So when that $1 billion is cut from our core funds, it can’t necessarily be covered by our other sources.

Samuels: This is one of your favorite arguments, which I have refuted on many occasions. In fact, the recent state audit found that most of UCs restricted funds are only restricted by the administration. Currently, UC places all types of funds, including federal grants, in its short-term investment pool. It then uses this pool as a central bank and takes out money to support any purpose it chooses. For instance, the UC recently transferred $1 billion into the retirement system and lent the state $1.7 billion.

Yudof: The University of California only serves its students. This is California’s university. It is defined by its public service mission. And it serves all the people of this state. So when UC’s core funding is cut, it ends up affecting all of us, too.

Samuels: Finally, we agree!

Report from Sacramento: Refund California and Support Peaceful Protests

2011-12-15T11:11:00.000-08:00

The state hearing on student protests in the UC and UCSC system produced one tangible result: the promise of a follow-up hearing. Legislators were also given an earful from students who very effectively tied the question of police violence to the state’s failure to fund higher ed. Moreover, the state heard loud and clear that the governor’s tax initiative fails to support higher education and makes workers and middle-class families pay more during a time when they are making less.

One of the most interesting moments occurred after a CSU representative blamed outside agitators for the “mob” violence at the most recent CSU trustees meeting. Charlie Eaton from the UAW set the record straight and told the legislators that the CSU has just lied. Eaton stressed that three of the arrested students were from the CSUs and the other student was a UC student, and all charges were dropped after news video clearly showed a police broke the door window with his own baton.

Eaton also stated that the students are part of the Refund California movement, which is trying to make bankers and millionaires pay to restore funding for higher education. Furthermore, he stressed that the UC regents and CSU trustees are almost all members of the 1% who are failing to protect California’s master plan. The legislators then asked the student panel what should be done about the regents.

Several of us pointed out that there will only be more protests, and the recent protest rules handed down from UCR will only make things worse. We later leaned that the UCR Chancellor reversed course, and he decided to take back the new restrictions on demonstrations. This reversal is another sign that the UC and CSU administrations are now playing defense, and they are feeling quite vulnerable.

While the members of the Refund California are pushing for the CFT Millionaire’s tax, we may also want to consider the new initiative to tax oil extraction to fund higher education. It is clear that now is the time to push for a progressive agenda for California.

Progressives Take on The Governor over Taxes

2011-12-08T09:16:00.000-08:00

While Governor Jerry Brown’s recently proposed tax initiative does seek to provide $6 billion in new revenue for the state, it is being challenged by three other initiatives, but only one is truly progressive. The California Federation of Teachers has formed a coalition with several other groups, including the Courage Campaign, to push for a tax on millionaires to fund K-higher education. Although some fear that competing initiatives may result in all of them losing at the ballot, we are hoping that everyone will eventually rally behind the CFT proposal, which is the only one that has a good chance at passing.

One of the problems with Brown’s initiative is that it combines a tax on people earning more than $250,000 with a sales tax increase of .5%. This combination means that struggling lower- and middle-class workers will end up paying more for a tax that might not help fund higher education. Moreover, the Governor’s initiative may not be approved by the Attorney General because it fails to pass the test of being a “single purpose” initiative. In fact, one of the hidden aspects of Brown’s proposal is that it moves the responsibility to house certain prisoners from the state to local governments.

The other main tax initiatives are also not progressive, and they have a lower chance of passing. To work through this problem of competing tax proposals, the CFT is pushing for a shared poll that would see what Californian voters would actually support. So far, a coalition of UC unions and students groups is supporting the CFT proposal, but the governor and Democratic members in the legislature are still pushing for a non-progressive solution. The next few months thus will be crucial for all of us to rally around the CFT proposal to make sure that higher education gets funded in a fair and equitable manner.

Open Letter to President Yudof

2011-11-28T05:47:00.000-08:00

Dear President Yudof,
A year ago, I told the regents that they needed to investigate recent incidents of police pepper spraying, tasering, and beating students. I said that we cannot have a real dialogue if students, faculty and workers are afraid that their actions will result in bodily harm. However, President Yudof, you and the Regents stood by the police and did nothing.

The same day I addressed the Regents, a police officer pulled a gun on several students. Once again, I urged the university to investigate and punish dangerous police actions, and still nothing was done. It has taken a viral video of police violence at UC Davis for the university to take this issue seriously.

While all of the attention is now on UC Davis, there needs to be an investigation of the broader culture of police hostility towards students, workers, and faculty. I believe this culture of violence starts at the top, and it is the Regents and the President who must be responsible for the safety on all of our campuses. When violent actions by the police continue to go unpunished, the administration sends the message that these acts are tolerated. What we need to do is to simply disarm the police on our campuses, which would follow the model of most private universities in America and most public universities around the world.

Bob Samuels, President, UC-AFT

Police Violence: The New Normal in America

2011-11-20T16:54:00.000-08:00

Recent actions by police at Occupy encampments and student protests shows what happens when state violence goes unpunished. The new normal in America is that the police feel justified to inflict pain on nonviolent protesters, and the roots of this change have to be connected to the redefinition of torture as enhanced interrogation. Moreover, the Obama administration's decision not to hold any members of the Bush's torture regime responsible has set the stage for the use of police violence without fear of retaliation.

While we are not used to thinking of the U.S. as a police state, every day sees a new move in that direction. It is now commonplace for police to show up at peaceful protests dressed in full riot gear ready to baton, pepper spray, and intimidate citizens employing their constitutional rights of free speech and free assembly. Of course, the ruling class, including President Obama, has been silent on this issue.

Just as torture has been renamed enhanced interrogation, so has nonviolent resistance been redefined as violence. These actions can only result in a de-legitimization of politics as we descend into a police state. However, the protesters know that the only way to get their message to the masses is to allow for the police to inflict pain because in our media, if it bleeds, it leads. The end result is, as Chris Hedges has argued, all of our "liberal" institutions (the media, the Democratic party, the universities) lose their legitimacy.

A new generation of Americans has now grown up in this police-media-political context, and even though young people are used to communicating on the disembodied Web, they are putting their bodies on the line to make our country wake up. The failure of the political class to respond in any rational way only pours fuel on the fire, and while it may be too soon to talk about a second American revolution, the current dynamic is generating major social unrest. We camp, they beat us, and we return.

All out to Davis!

Occupy California, Refund Higher Education, and the Question of Violence (Plus Schedule of Events)

2011-11-15T10:57:00.000-08:00

On November 15th, faculty and students at UC Berkeley will hold a one-day strike and will attempt to re-establish an Occupy Cal encampment. This action is supported by thousands of students and faculty members throughout the UC system and around the world. One of the reasons for this demonstration is to protest the excessive use of police force that has been used against students and faculty members. People will also be protesting the last-minute cancellation of the UC Regents meeting.

While students, employees, and faculty members have asked educational leaders to sign a pledge to join us in our call to re-fund higher education in California by making the banks and wealthiest 1% pay, the regents have responded by hiding from the public. So the new plan is to track down the higher ed leaders on November 16th when Southern California protesters will converge at the CSU trustees meeting in Long Beach, and Northern California protesters will rally and march in the San Francisco financial district, starting at noon at Justin Herman Plaza. We will once again demand that the UC Regents and CSU trustees sign our pledge, and we will invite them to then join us as we continue the march to the state building in San Francisco. Once there, we will demand that government officials also support our pledge, and we will have a people’s regents meeting.

Setting the Stage
When the UC announced that it had canceled the Regents meeting, it stated that, “they had received information indicating that rogue elements intent on violence and confrontation with UC public safety officers were planning to attach themselves to peaceful demonstrations expected to occur at the meeting.” While the UC did not reveal the sources for these threats, it is important to ask, how does the university define violence?

According to a UC police officer, the university is using the following definition of violence, “"the individuals who linked arms and actively resisted, that in itself is an act of violence...I understand that many students may not think that, but linking arms in a human chain when ordered to step aside is not a nonviolent protest." Someone needs to call Gandhi and Martin Luther King to tell them that the whole history of non-violent resistance has been rewritten.

It is of course outrageous for any public university to declare that students and workers can be beaten with batons if they engage in the dangerous act of linking arms, and it is especially absurd for this claim to be made at UC Berkeley, which stands for the birth of the Free Speech movement. If people are no longer able to protest nonviolently, then they may be forced to use other means. (I am not endorsing here the use of violence; rather, I am arguing that the police have to allow for nonviolent resistance)

By shutting down the Regents meeting, the university has also sent the message that the university is not only being privatized on a financial basis, but it is also being privatized on a bureaucratic basis. The regents are now telling the people of California that public matters have to be discussed in private, and the public is no longer invited to witness the dismantling of the “world’s greatest public university.”

Following the day of activities on the 16th, attention will turn to the one-day strikes at CSU East Bay and CSU Dominguez Hills. Ultimately, what is at stake is the future of public higher education in California and around the world. As the refund higher education movement couples with the Occupy Wall Street movement, a new level of organization and energy will emerge.

SCHEDULE FOR NOV 16 STATE-WIDE DAY OF ACTION TO REFUND PUBLIC EDUCTION

10 – 10:30am: free busses leave from Telegraph and Bancroft on Berkeley
11:30am – Noon: gather for a free lunch.
Noon rally at Justin Herman Plaza in collaboration with Occupy SF, 3
blocks from the Embarcadero BART station
1:00pm: March through the Financial District to make the banks pay for
the financial crisis they created
4:00pm: People's Assembly for Public Education at the State Building
to call on Gov Brown to make the banks pay public education, 455
Golden Gate Ave San Fransisco
3:00pm early bus returns to UC Berkeley
6:00pm remaining buses return to UC Berkeley

SCHEDULE FOR NOV15 OPEN UNIVERSITY & STRIKE AT UC BERKELEY
8am-5pm: All day Open University activities (teach-outs, workshops,
public readings, installations, etc.) at Sproul Plaza and surrounding
areas.
Noon: Mass convergence at Sproul Hall and formal inauguration of
day-long Open University.
Noon – 2pm: Teach-outs in Sproul Plaza.
2pm: Rally against police violence and other, related forms of
violence, including dispossession, privatization, and debt.
2:30pm: March to Berkeley High and Berkeley City College.
5pm: General Assembly at Sproul Plaza.

The Master Plan In Reverse

2011-11-14T08:25:00.000-08:00

Bob Meister from UCSC has written an excellent article on the financialization of the university and the death of the Master Plan. Meister’s research shows that as tuition in the UC system continues to grow and in-state students are replaced with nonresident students, Californian students who in the past would have gone to the UCs or the CSUs are now going to community colleges. However, since the community colleges have also experienced budget cuts and enrollment reductions, a lot of the students who used to go to the community colleges are now going to the for-profit colleges, like the University of Phoenix.

One of the results of this system is that low-income, minority students are being forced to pay high-tuition at low-performing for-profit institutions. In turn, these schools, which often have a graduation rate of under 10%, suck up over a billion dollars in Pell Grants a year as students take out high-interest subprime student loans. Moreover, since these loans are usually guaranteed by the federal government, and they cannot be erased through bankruptcy, there are a safe bet for financial speculators.

In this Reversed Master Plan, the defunding of each system results in higher tuition levels coupled with larger student debts and lower degree production. Not only will students have to work twenty years to pay off their student loans, but they will be unable to pay taxes or to contribute to economic growth. Instead of universities and colleges creating social mobility and reducing economic inequality, they are generating higher levels of inequity. To help change this dangerous path, please come to the UC Regents meeting or the CSU trustees meeting on November 16th and call for a new economic and educational model. You can also sign here a petition to protest police violence during the UC Berkeley demonstrations on November 9th.

UC and the 99%

2011-11-11T09:05:00.000-08:00

My last few posts have documented the growing wage inequality in the UC system. Like the rest of America, the university is structured by a divide between the people at the top and everyone else. This type of income disparity has motivated the Occupy movement to call for a fairer system, and we are now seeing a series of protests at the UC campuses, which will culminate in a large action at the next UC regents meeting on November 16th.

Already our actions are having an effect. In fact, the LA Times reports that due to the fight back against President Yudof's planned tuition increases, the system has backed off of its plan to increase tuition again for now. Currently, we have to turn our attention to getting the state to raise taxes on the wealthy so that state funding for higher education can be restored.

As the important book, The Spirit Level, reveals, income inequality not only undermines the productivity of an economy, but it helps to generate a host of social problems. According to global statistics, the developed countries with the highest levels of income inequality, also have the lowest levels of social trust, and the highest levels of crime, infant mortality, heart disease, and illiteracy. Even the rich people in unequal societies suffer from increased anxiety due to their constant drive to increase their wealth.

On the other hand, in countries where there is a lower disparity of income, like the Scandinavian nations, people report a higher rate of happiness and health. As The Spirit Level reveals, when people feel that their society is not divided between winners and losers, they support social programs and promote education and subsidized healthcare. However, when wealth inequality grows, social welfare programs are not protected because people do not feel that they are living in a just society.

In the case of the UC system, the growth in the number of high-earning administrators and medical faculty undermines any sense of a shared purpose. Moreover, as medical incomes increase, the cost of healthcare in California also increases. We can also anticipate that as UC moves to a new compensation system for faculty, we will see even more wealth disparity and a reduced sense of social trust. Likewise as income becomes concentrated at the top in California, we witness a decreased desire to support social welfare programs and higher education. In short, wealth inequality is the driving force behind most of our social and economic problems.

Wage Disparities in the Professorial Ranks

2011-11-07T08:52:00.000-08:00

In a previous post, I presented data on wage inequality in the UC system amongst different types of high-earning employees; what I would like to do now is to discuss inequities in the professorial ranks (these statistics do not include medical, law, or business professors).

One way of approaching this data is to first look at the average salaries for assistant, associate, and full professors. For instance, in 2010, there were 3,246 full professors, and their average total compensation was $139,633. Meanwhile, during the same time period, we find 1,322 associate professors with an average gross pay of $117,527, and 984 assistant professors with an average total pay of $76,949.

While the system-wide average gross pay for all academic professors was $116,665 in 2010, if we look at this average on the different campuses, we find the following: UCLA - $137,683; Berkeley - $127,607; San Diego - $118,480; Santa Barbara - $115,349; Davis - $101,903; Riverside - $98,107; Irvine - $107,462; Merced - $88,229; and Santa Cruz - $99,797. Excluding Merced, we see that the difference between the average academic professor salaries at UCLA and Riverside is $39,576 or 34%.

Also, looking historically, we know that in 2004, there were 216 full professors making more than $200,000, and in 2006, the number of high earners dropped to 194, but in 2008, this same category jumped to 380, and in 2010, it went down slightly to 372. Therefore, the number of full professors making over $200,000 nearly doubled between 2006 and 2008 and has since stabilized. Meanwhile, if we look at the salaries of assistant professors during this same period, we find that the number of assistants making less than $70,00 stayed almost the same between 2004 and 2008: there were 577 assistant professors making less than $70,000 in 2004; 553 in 2006; 558 in 2008; and 401 in 2010. These statistics tells us that the salary growth for academic professors was concentrated at the top during the period of 2006 and 2008.

It would be interesting to look at the salary disparities in the different disciplines, but this information is not available. Over all, it appears that the biggest wage disparities occur between the campuses with the highest number of graduate students (UCLA, UCB, UCSD), and the ones with the highest percentage of undergraduates (UCR, UCM, UCSC).

New UC Salary Data: 2010 was a Good Year for Higher Earners

2011-11-01T06:46:00.000-07:00

New UC salary data is now available at Jeffrey Bergamini’s compensation database, and it reveals that in 2010, there were 4,237 UC employees making more than $200,000 for a total gross pay of $1.26 billion and a base pay of $744 million. This means that for the over 200k club, more than 40% of their pay came from extra pay; moreover, the over $200,000 earners raked in 12% of the gross pay for the whole system ($9.3 billion), while they represented under 3% of the regular employees and less than 1% of the total number of employees (including student workers).

If we compare 2010 to 2008 and 2006, we find that in 2006, there were 2,464 employees making over $200K with a total gross pay of $680 million, while in 2008, there were 3,643 high earners with a total gross salary of $1 billion. In other words, during the UC’s “fiscal crisis,” we have seen a continual increase of employees entering into the over-200K club.

To further investigate who makes up this class of high earners, we can break down these employees into six major categories: administrators, medical faculty, athletic coaches, business school professors, academic professors (excluding business and law professors), and law professors. These six categories accounted for over 95% of the revenue of the over $200,000 club in 2010.

Starting with the medical faculty, we find that in 2010, there were 2,772 medical faculty making over $200,000 for a total gross pay of $867.4 million. This means that in the period of 2008 to 2010, the medical faculty in the over 200k range increased their numbers by 476, while their total gross pay went up $187.4 million. It is clear that the medical centers are an economic powerhouse that drive inequality in the UC system.

The second biggest group in the over-200k club is the administrators. In 2010, we find 351 bureaucrats making a total of $102 million, while in 2008, there were 397 administrators in the over 200k club making a total of $109 million. In other words, due to the downsizing of the Office of the President, there are now fewer administrators in the over-$200,000 club, but their average pay is higher.

The next biggest group of high earners are the academic professors outside of law, medicine, and business. In 2010, there were 397 professors making over $200,000 for a collective gross pay of $93 million. If we compare these figures to 20008, we discover that this group has been reduced by 18 people, and their collective pay has gone down by $3.6 million.

In the case of the business school faculty, in 2008, there were 372 faculty making more than $200,000 for a collective gross pay of $93 million, while in 2010, 439 high-earning professors had a collective gross pay of $115 million. This statistics show that while the number of general campus, high-earning professors has been decreased, the medical and business professors making over $200,000 has continued to increase.

In the case of law professors, we find that in 2008, there were 85 making over $200,000 for a collective pay of $21 million, and in 2010, this same group consisted of 96 professors making a collective gross pay of $25 million. So we once again, we see a trend of increasing the number of high-earning professors in the professional schools, while the nonprofessional school professors are reduced.

The final group is the athletic coaches; in 2008, there were 24 coaches making over $2000,000 for a collective payout of $12.8 million, and in 2010, this same group has 35 employees at a collective gross pay of $16 million. In other words, the athletic departments continue to do well in bad times.

These statistics show that as the university continues to rely increasingly on undergraduate tuition to fund the system, more of the pay is going to people working outside of undergraduate education. Moreover, since the UC is the third biggest employer in California, we can see how the wage disparities in the UC system contribute to the growing wage inequality in the state.

Yudof’s Salary Plan: What does it Really Mean?

2011-10-27T07:23:00.000-07:00

In August, President Yudof announced a plan for merit increases for non-represented staff making less than $200,000 and for faculty who have been deemed meritorious. The initial idea was to reward people who have not gotten raises during the last few years. Yudof also wants to give the campuses the ability to stop other universities from stealing UC faculty; however, this plan is full of unanswered questions.

Coupled with the new merit-based 3% salary increase, we find a new policy that will allow faculty to use grant money and other external sources of income to increase their base salaries. A good discussion of this plan can be found at Remaking the University, but it is important to stress that in reality, there are four main ways that people in the UC get increased compensation: across the board salary increases, merit pay, special compensation pools, and negotiated compensation. During the last few years, some represented employees have gotten salary increases, while many other employees have continued to receive merit increases. Furthermore, the medical centers and other units have developed their own special compensation pools, while non-represented faculty and administrators have continued to get renegotiated compensation deals.

In fact, except for across the board salary increases, most of the compensation increases are handled on the campuses on an ad hoc basis, and it does not look like this system is changing. Moreover, in the current move to let the campuses keep all of their revenue, it is unclear what Yudof’s salary plan means. Is the Office of the President going to distribute state funds to the campuses in a special merit pool, or is the idea to simply instruct the campuses to allow staff and faculty to compete for a share of their local revenue?

If we look at the facts on the ground, we discover that professors and administrators often get their compensation increases through private negotiations. As the past Academic Council Chair Dan Simmons wrote a few years back in his study, “The Death of the UC Salary Scales,": "At least one campus has provided off-scale salaries to 100 percent of its new faculty appointments. Some campuses are utilizing devices to broadly provide off-scale enhancements to faculty in order to regularize the salary inversions that result from hiring new faculty with off-scale salaries exceeding the compensation of full professors. One or more campuses utilize a shadow salary scale to reflect market level compensation.” In other words, many--if not most--of the non-represented faculty do not get their raises through merit reviews or movements up the salary scale; instead, increases are negotiated through private deals between professors and administrators. In fact, Simmons pointed out that 85% of the professors are being paid off of the official salary scale.

As Simmons argued, the current system has many flaws: “The evolution of a system that compensates faculty who are newly appointed, or who threaten to leave and are retained with off-scale salary increments, replaces the historic peer reviewed compensation system with a system that is individually negotiated with campus administrators who have the discretion to grant or deny a salary increment. A step IV professor in one place is no longer on the same playing field as a step IV professor in another place, perhaps as close as across the hall in the same department. Indeed, the step IV professor might discover that his or her new colleague recently hired as an assistant professor is earning a higher salary.” Not only are some new faculty getting higher pay than faculty members who have been teaching for several years, but the off-scale system circumvents the merit review and peer review process. It also creates collusion between individual faculty members and administrators.

As I have pointed out before, the end result of the current system is incredible inequality within the professorial ranks, with some faculty members getting $40,000 raises and some getting nothing. While we have been told that the faculty senates have been working on this problem, there is no evidence that a new system and culture has been implemented. In fact, the Office of the President has been pushing a market-based system that Simmons previously critiqued in the following way: “The market approach to setting individual salaries says several things to a faculty member who has loyally done his or her job and progressed through the salary ranks on a regular basis. First, you are a fool for not having sought to move elsewhere with a higher salary in order to negotiate an off-scale at home. Not only are you a fool, your work must be worth less than the person across the hall newly hired with an off-scale that is higher. Second, the first thing you should do is look for an appointment at another university. The position might be more attractive in any event than working in a place that does not appreciate your efforts. Third, the University must be more interested in bringing in new superstars with expensive start up packages than maintaining the loyalty of its current faculty base.” Thus, in order to compete with private universities for professors and administrators, the university is forced to renegotiate salaries in a secretive and individualized manner. In this system, certain people are deemed market worthy, while others see their wages stagnate.

By arguing in his letter that the new pool of money should be used to recruit and retain faculty who are being “courted by competing institutions,” Yudof is signaling to the campuses that they should continue to negotiate secret deals with their stars and potential stars. While some may prosper from this system, many will actually see their compensation go down as they pay more for healthcare and pension. However, since everyone wants to be a star, no one will rock the boat, and the majority will suffer. Like our national economy, wealth inequality grows because the majority of people think they will profit from a system that screws them.

UC Announces New Pension Rates

2011-10-20T07:06:00.000-07:00

At the next UC Regents meeting, the Office of the President will ask the Regents to endorse new pension contribution rates. According to this proposal, starting in July 2013, current employees will pay 6.5% of their salary into UCRS, and the UC will put in 12%. For people hired on or after July 1 2013, they will pay 7%, while the UC will pay 12%. Of course, these changes will have to be negotiated for represented employees.

One interesting aspect of this is that the university has decided to contribute 12% for the people in both the new and old plan. This means that while people in the new plan will receive a reduced benefit, the university does not have an immediate incentive to fire current workers and replace them with new hires, which often happens when a new pension tier requires a lower employer contribution. However, over time, the people in the new system will cost the university less.

Ultimately, new hires will be paying more and getting less, and this inequality will help to reduce the university’s long-term liability. Moreover, for the next three years, much of the increased contributions from employees may be matched with new salary increases, and so the university will not increase its revenue from these changes. In fact, the move to a 12% employer contribution coupled with a 3% salary increase this year and a possible additional 3% next year will mean that the UC will see its compensation costs increase by 11% in the next two years (the UC currently contributes 5% to the pension plan). The long-term plan is to increase the employer contribution by 1% each year until they reach 16%.

Once the UC starts paying 16% of covered compensation, it will cost the university over $1 billion a year to fund the normal cost of the pension plan. Furthermore, the UC still has to deal with escalating retiree healthcare costs and the fact that the state still does not contribute to the pension plan. I predict that the university will seek savings by continuing to shift more of the cost for healthcare and retiree healthcare to the employees. Without a significant change to recent healthcare legislation, workers inside and outside of the university will continue to see their total compensation decrease.

UC-AFT Goes to Wall Street: OCCUPY and Demand

2011-10-10T09:05:00.000-07:00

I am going to the Occupy Wall Street protests this weekend, and I hope to circulate a list of demands that a wide variety of groups and individuals can endorse. Here is my list of what many of us want:

1. A federal works program to employ 10 million people in construction, community service, education, and green technology

2. Allow all underwater homeowners to refinance mortgages based on current home values.

3. Prosecute bankers and investors involved in fraudulent loans and related derivatives.

4. Prosecute people who authorized or committed torture.

5. A federal investment in green technologies and research.

6. A community service program so college students can forgive their loans.

7. The end to police intimidation of protesters.

8. A tax system that makes the wealthy pay their fair share and a tax for financial transactions.

9. A commitment to fight climate change.

10. A withdrawal from Afghanistan and Iraq.

11. A freeze of healthcare premiums.

12. Protect Social Security, Medicare, and Medicaid.

13. Support the right to unionize.

14. A new campaign finance reform.

While the media complains that the amorphous protests have no single theme, it may be possible to organize around a set of common demands. I will report back on my return.

From Obama to Vanity Fair: Telling the Wrong Story

2011-10-05T12:26:00.000-07:00

A recent Vanity Fair article, “ California and Bust,” by Michael Lewis attempts to blame the difficult financial status of many states and municipalities on the costs of public pensions. The following passage is either the result of bad editing or ideological bias: “A prison guard who started his career at the age of 45 could retire after five years with a pension that very nearly equaled his former salary.” As a commenter writes in response to this claim, “What formula is Mr. Lewis using to arrive at this statement? The 3% @50 formula is the top formula used in California and if a Guard made 150,000.00 a year as the base salary used in calculating the pension it would work out as: 150,000 x 3% x 5 years = 22,500.00 annual pension. Please. This is far from the "very nearly equaled his former salary".” Of course this correction is buried in the comments section, and will not be seen by anyone who reads the article in print.

While Lewis’ article appears to be a balanced, neutral expose on our fiscal crisis, it spends virtually no time discussing how pensions were devastated by the crash of the stock market in 2008-09 and how states and local governments have been undermined by the loss of tax revenue related to the collapse of the housing bubble and the crash of the markets. Like so many other stories discussing our economic situation, there is no attempt to explain how illegal mortgages coupled with dangerous financial derivatives resulted in the loss of millions of jobs and trillions of dollars of wealth.

Since the President and other leaders have failed to explain to the American people how our economy has been ravaged by financial speculation, people now believe that the cause of our problems are pensions, benefits, public employees, and unions. Moreover, due to the fact that the President did not make the culprits of our financial woes pay for their misdeeds, he helped to fuel the displacement of blame onto victims of the financial collapse.

Like Obama’s decision not to prosecute the perpetrators of our torture regime, the failure to hold big banks and investors responsible results in a lack of “moral hazard,” which means there is no penalty for destructive behavior. With no one else to blame, the Right produced a populist Tea Party that blamed big government instead of too-big-too fail banks.

Since the President knows that he has to raise $1 billion to run for office, and his Republican adversaries face the same issue, no one wants to step on the toes of guilty investors. In a more rational world, we would see arrests and huge fines, and we would also see the move to tax investment profits at the same rate as earned income, Ina rational world, we would also see a financial transaction tax to slow the pace of our global casino. Yet, instead, we get empty rhetoric and talk about deficit reductions and debt limits.

Let’s hope that the Occupy Wall Street actions turn into an effective national movements that tells the right story and provides the right solutions.

OccupyLA Update

2011-10-03T13:55:00.000-07:00

On October 2, 2011, John Bruning the UC-AFT Field Representative for UCLA, filed the following report:

I went to the OccupyLA march to City Hall on Saturday morning, not really sure what to expect. There was a wide variety of people there: progressives, libertarians, "Anonymous" types, socialists, anarchists, students, vets, older folks, etc.

Nearing the end of the second day, we're still working through decision-making processes, goals, other structures, and next steps. It's a very collective process, which means that it's a very slow process, but it's also meaningful and it keeps power decentralized.

We've overcome a few challenges so far and survived one night of "illegally" sleeping on the City Hall lawn. But we still have practical challenges to overcome for the movement to grow.

First is education. There are a few of us with backgrounds in organizing and direct action, but the vast majority are new to activism and don't know what to do. There's been a lot of sitting around for the past few days, but there's movement to start holding workshops and skillshares soon.

Second is action. Everyone here wants to do SOMETHING. There was an action today at the Metro station, but it suffered from a lack of planning. We are looking into ways to most effectively plug ReFund CA and OccupyLA together, and the Thursday action at the downtown LA Bank of America is already being discussed here.

Finally, many people are trying to figure out how to take OccupyLA out of the park and expand into other communities. There has been talk of more public occupations around the metro area, and also reaching out to the rest of the 99% who can't be here, through workplace and community organizing.

I have to go to the General Assembly now, but it's very exciting and there's a lot of energy here, and the next few days will be critical to see if this movement continues in LA and what form and direction it will take.

A Report from Congress and the White House

2011-09-26T06:49:00.000-07:00

I spent September 22nd and 23rd in D.C., and I got a full dose of a city under attack from the Right and high humidity. On Thursday evening, we had a meeting with Congressional members from California, and I was able to speak to Nancy Pelosi. She stressed how things are so bad that Republicans are trying to make the Democrats come up with budget reductions to cover the costs of disaster relief. Likewise, at the White House, all of the President’s top advisors emphasized how difficult the other side is acting and how hard it is to get anything done.

I asked one of the architects of the President’s jobs bill, what the administration can do for recent college students and graduates who are facing the triple whammy of skyrocketing tuition costs, giant student loans, and poor employment prospects. I also questioned why the jobs bill did not simply propose a government works program that would directly hire millions of people. The President’s economic advisor responded that the jobs bill is the best they can accomplish with the Republicans in control of the House. He also said that he agrees with my assessment concerning the sorry plight of college students, but they wanted to put together a package that was responsible and achievable. I added that since the Republicans will block everything except for the tax cuts, why didn’t the President propose something clear and bold, and then let it get shot down. [We were told by White House officials not to directly quote anything from our meetings]

I posed similar questions to David Plouffe, the President’s main political advisor, and Bill Daley, the President’s Chief of Staff. Both of them stressed that the President is being responsible, and he is proposing things that the Republicans have supported in the past, and so if they reject them now, they are just being cynical. Several of the President’s senior advisors pointed out how the jobs bill will fund community college infrastructure and also help the states so they do not layoff more teachers. In response to one of my questions about the decreased funding for higher education, White House officials emphasized how hard the President and the Democrats in Congress had to fight to protect Pell grants.

I walked away thinking that the administration is underestimating the horrific nature of our employment situation. After all, as I told several top advisors, there are close to 25 million people who are unemployed or underemployed, and we were told that the jobs bill may create 1.5 to 2 million jobs. In one of my more aggressive moments, I asked how can we support the President, if we do not know what Democrats stand for anymore. After all, the President’s recent jobs bill and deficit reduction program rely on the classic right-wing themes of cutting taxes, reducing the deficit, and reforming entitlement programs. The President’s main political advisor got rather testy when I made this claim, and he went on to list everything the President has done. I really think they do not get it, and they refuse to present a clear and consistent set of progressive policies.

Several people in the audience thanked me for my questions and for holding the administration’s feet to the fire. I was later told by people working for the President that my questions were heard, and I should stay in touch. Later, during a meeting with the Department of Labor, I stressed how universities are using the current economic downturn to outsource work, casualize labor, and ignore basic labor laws. I was told that the Republicans are doing everything they can to tie the hands of this administration, and we must continue to highlight the positive things the President has done.

I actually do think that the President has done some very positive things, but we are in a crisis, and we need bold, clear action. While talking to members of Congress and White House Staff, I proposed a government works program that would hire 10 million people and would not rely on tax cuts, subsidies, or corporate hiring. I argued that the administration needs to show that government can work, and the only way we are going to reduce unemployment to the 3-4% range is if the government simply hires people. I suggested that the administration use TARP funds and money from mortgage fraud suits to fund a jobs program without the help of the Congress. I was told that this can’t be done, but they will look into some of my other suggestions.

To discuss how we can push the country in a more progressive direction, I am organizing a meeting in November at UCLA. For more information, you can read my article on an alternative jobs bill and the need to rethink our current political stalemate. Please let me know what you think.

UC-AFT Going to the White House

2011-09-13T09:23:00.000-07:00

I have been invited to attend a day-long meeting at the White House on September 23rd as a community leader, and while the main topic will be jobs and education, I have been asked to provide a list of important discussion points concerning my community, which I am defining as public universities. So here is a first draft of what I hope to discuss:

1. President Obama should stress that his stimulus plan saved thousands of university jobs and helped to control tuition increases, and now without the ARRA money, tuition is skyrocketing, classes are being cut, and students are taking on tremendous debt.

2. The ARRA money also helped to fund important research that is now being curtailed. While universities are the engines of economic growth and technological innovation, they are now facing reduced federal grants and decreases in graduate student funding. We hope the President will consider using TARP funds to support green technology and research at our universities.

3. When states are forced to pay for increased healthcare costs and unemployment benefits during a time of decreased state revenue (taxes), the one thing they know they can cut is higher education, and it is middle-class parents who end up paying for increased tuition costs. Federal money should be used to protect public universities from decreased state funding.

4. In order to save money, universities have moved to a system where the vast majority of the faculty are temporary and part-time with no possibility for tenure or a living wage. To reverse this situation, the President should require any university or college receiving federal funding to hire the majority of new faculty members on a full-time status.

5. Like other American institutions, universities are bearing the burden of excessive healthcare costs. The President should consider freezing health insurance premiums for the next two years.

6. The President needs to make a strong statement about the positive contributions teachers, librarians, staff, and professors make to our society. While many Republicans are demonizing teachers, public employees, and unions, we need a leader who stands up for our nation’s educators.

7. Public universities are still the main paths to the middle-class, and they must be protected and supported. To help rally his base for the next election, President Obama should produce a comprehensive plan to protect the middle class, and this plan needs to address the loss of funding for public universities. Instead of giving subsidies and tax breaks to oil companies, federal funds should be redirected towards new energy research at our public universities.

8. The President should act through executive order to monitor financial aid that goes to for-profit colleges. These schools often place students in debt without providing effective instruction.

9. Due to the reduction of state support for public universities and the resulting increases in tuition, students are taking on massive student loans, which is creating another asset bubble. The President should act to subsidize student loans and extend the payment schedules.

If you have any suggestions, please comment below.

UC Might Increase Tuition 81% Over the Next Four Years

2011-09-12T08:06:00.000-07:00

When the Regents meet September 14th, they will discuss a multiyear funding proposal that will likely result in a series of large tuition increases over the next few years. The heart of the plan is found here: “Components of a multi-year plan would include the assumptions about efficiencies and revenue- generating strategies, and a proposal that, under the optimal scenario, would call for eight percent annual increases each in State funds and in tuition and fees through 2015-16. If the State is unable to meet its share of this cost, student fees would be raised further to make up the State’s deficit. Thus, if the State provides only four percent increases each year, student tuition and fees would increase by 12 percent annually. If the State provides no increase, student tuition and fees would increase by 16 percent annually. Incorporating this principle into a multi-year plan will make clear to all stakeholders that a failure to invest in the University will directly increase the amount students and their families pay to attend.” According to this structure, if the state does not increase funding over the next four years, tuition will go up 16% each year for a cumulative total of 81%.

Of course, the state could increase its funding, and this would mean a smaller increase for students, but if recent history is any indicator, the state is more likely to decrease funding, and this possibility is not addressed directly in the formula mentioned above. What the new plan does argue is that a four-year strategy would force the state to think twice before it reduces funding for the UC system: “Establishing the direct relationship between State funding and required tuition increases into a multi-year plan will make clear to all stakeholders – the Governor and Legislature, students and parents, and other interested citizens – that a failure to invest in the University will cause an increase in the amount students and their families pay to attend.” So far the state has not been very concerned about tuition increases, and so the real result of this plan could be that the state will just take for granted huge tuition increases. After all, students keep enrolling, and the university has shown that it will cover any state reductions by forcing students and parents to pay more.

The State Response to the State Audit and the Future of UC Funding

2011-09-02T09:29:00.000-07:00

I have met recently with several legislators, the Legislative Analyst, a member of the state auditor’s team, and people from the Brown administration to discuss the audit of the UC system. All of these stakeholders stated that the audit requires follow up, and in fact, the UC is required to report in sixty days, six months, and one year on how they are responding to the auditor’s recommendations. In order to ensure that UC does indeed respond in an effective manner, a legislative hearing is being considered for early next year.

The two main issues that the state is looking at is how does the UC spend state funds and how much does it cost to educate each additional undergraduate, graduate, and professional student. While the UC’s response to the audit was that the process was a waste of taxpayers’ money, and nothing important was found, several legislators do think that the UC needs much more transparency in its budget. The biggest concerns include the high cost of medical education and the unequal distribution of funds to the campuses.

Of course, the UC can now say that it is making the system more transparent by allowing the campuses to keep all of the revenue they generate, but there is still the question of state funds, which I have shown accounts for most of the inequality of funding among the campuses. This issue of state funding will be discussed at a Regents meeting at the end of the year after the committee on “rebenching” finishes its analysis.

As I have stressed, the big tension is between keeping any new funding model “revenue neutral” or moving to a more equitable system. In order to accomplish either of these tasks, the UC still has to open up and reveal how it has been distributing state funds to the campuses and what it plans to do in the future. It turns out that the state audit is also looking at these same issues, and so it is possible that the two processes, internal and external, will work together. Yet, it is clear that the wealthier campuses will fight to keep their high levels of funding, and in order to maintain the status quo, the push will be to keep the spending of state funds nontransparent.

Already, we find an indication that the medical centers are being privileged by the Office of the President. In a July letter to President Yudof from the Academic Council, we find the following: “Council advises that the full $650 million reduction in State funds in the 2011-2012 budget year be allocated among the campuses under the methodology applicable to State fund reductions developed in the Funding Streams Proposal of December 21, 2010.” As the letter continues, it clarifies that, “The allocation of budget reductions was based in part on a principle that the proportionate allocations to campuses reflect each campus’s relative ability to offset reductions by raising nonresident tuition (NRT) and Professional Degree Supplemental Tuition (PDST).” The idea here is that the campuses that have increased their revenue by increasing the number of high-paying nonresident undergraduates and professional students should receive a higher budget reduction.

It turns out that UCOP did not follow this method, and the Academic Council was not notified by this change: “we were surprised to learn only last Friday, July 22, that allocations were likely to be based on the proportions derived from the Funding Streams Proposal provisions for allocating augmentations rather than reductions.” In other words, when it was distributing cuts to the campuses, UCOP did not take into account the different abilities of the campuses to generate their own income to make up for any reductions. Thus, the poorer campuses will get poorer, and the wealthier campuses will get wealthier.

The Academic Council hints that a major driving force behind UCOP’s decision to protect the wealthier campuses is the high cost of medical education: “The San Francisco situation is far more complex. A new business model to support medical education in a time of diminished state funding is urgently needed. I note, however, that the relative scarcity of tuition income at UCSF means that UCSF’s share of the $500 million cut is a substantially smaller fraction of UCSF’s total state support. The relative scarcity of tuition at UCSF cannot also be used to justify shielding UCSF from the effect of the $150 million cut.” The Academic Council makes an important argument here, which is that the UC cannot continue to disadvantage the other campuses in order to use state funds to subsidize medical education at UCSF.

Everyone in the UC system should be concerned about how UCOP and the regents decide to distribute state funds. Since the campuses will be able to keep their own revenue, there is an incentive for the wealthier campuses to increase their wealth by increasing their number of nonresident students and decreasing their number of Californian students. Moreover, the medical centers will continue to use their enormous resources to fight for more funding, while the smaller campuses will suffer from a lack of new revenue. All of these trends will force continual tuition increases for undergraduates at a time when undergraduate budgets are being downsized. Let us hope that the state audit pushes the UC system to find a more equitable balance.

The Market and You

2011-08-10T12:49:00.000-07:00

Since we are now all invested in the stock market, even if it is indirectly, it is important to understand certain key aspects of how Wall Street functions today. One aspect is that while many people are invested through pensions and 401k plans, few people understand how the market works, and many do not have any control over their own investments. Moreover, although the media often says things like, “the market went down today on news of the debt deal,” the market is not a single entity speaking with a single voice; however, dominant players in the markets often follow each other, and the result is that large movements can occur based purely on a herd mentality.

Some people are now asking why the markets have gone up the last couple of years, while the economy appears to be doing very badly. One reason for this disconnect between the real economy and the financial economy is that the Federal Reserve has sought to strengthen the banks by essentially allowing them to borrow money for free. The idea behind this policy is that during the fiscal meltdown of 2008-9, the banks stopped lending money, and there was a real credit crunch that cut off the flow of cash to major corporations and financial institutions. The Fed also felt that if they gave money to the banks, and the banks lent money to corporations, the companies would start hiring people and stimulate the economy. However, it is now clear that companies and banks are sitting on trillions of dollars, and they have shown that they would rather make money through financial transactions than through producing new jobs.

Another reason why Wall Street has gone up while Main Street has gone down is that Wall Street rewards companies for shedding jobs because this increases the profit margin. There is thus an inherent push for companies to cut their labor costs and increase compensation for people at the top, and many banks and corporations have used their profits and debt to buy their own stocks and increase bonuses for their top earners.

Another powerful player in the markets are the private equity firms that often use borrowed money to take over companies (leveraged buyouts) and make these corporations more profitable by laying off workers and selling parts of the companies. These takeovers often go bad because the bought company has to take on so much debt, while it reduces its productivity. Moreover, Mitt Romney, who is now running for president, made much of his money through his private equity firm, Bain Capital, and so it is possible that our next leader will pursue the leveraged buyout model on a national level.

While many people in our federal government now feel that the key to a healthy economy is to put more money in the hands of the banks and large corporations, it is clear that our multinational companies and financial institutions have no incentive to invest in job creation. In the past, corporations knew that they needed to produce well-paying jobs in America so that there would be enough people with cash to buy their products, but now in the global economy, multinational corporations often look around the world for consumers. There is thus little incentive for companies to hire more workers or provide a good wage for Americans.

The only solution is a national job policy or industrial plan that would push companies to use their savings to increase employment. However, the only way to do this would be massive subsidies, tax breaks, trade tariffs, or penalties for exporting jobs. Of course, the other solution is to have the national government feed money into new industries like green technology. Yet, not only is the Congress blocking this type of program, but the move against government spending means that more jobs will be lost through the reduction of federal and state budgets.

Adding to this employment problem is the growing power of the bond raters and bond buyers who believe that the key to economic health is reduced taxes and a reduction of governmental spending. These financial players are not interested in job growth or stagnant wages; in fact, bond raters often reward companies that fire workers or eliminate benefits.

Only a strong national leader can reverse this course, but it appears that the president and Congress have bought into the idea that we must follow the demands of the markets and the raters. It is clear that we must organize against these forces to rebalance the economy and take back our jobs from the financial raiders.

UC Crushed by Debt Deal

2011-08-04T08:29:00.000-07:00

The University of California will certainly be a big loser in the debt deal recently signed by President Obama. In fact, what most commentators have missed is that in the first round of budget cuts triggered by the debt deal, graduate students will be forced to pay more for their loans, and they will also have to pay earlier.

While the first round of cuts protected Pell grants and federal research grants, the next round will most likely cut deeply into both of these programs. Moreover, as George Skelton shows, future and present cuts to Medicaid will force states to shift more funds away from state-supported programs as they seek to pay for escalating healthcare costs. In other words, when the federal government cuts social programs, the states have to make up for the losses, and the result is that discretionary programs like higher education are reduced.

If we combine the future federal cuts to Pell grants and research grants with the increased burden on states to fund social welfare programs, we are left with a significant decline in funds for university research and graduate education. Ironically, these cuts to the UC system are occurring during a time when the Academic Council is asking President Yudof to accept more graduate students and discontinue the tuition derived from nonresident graduate students. Part of this new funding model asks the state to increase its support for UC research and expensive graduate programs during a time of diminishing state funds.

Next week, I will dissect the Academic Council plan, but for now, I just want to stress that the only real solution is for the Senate faculty to realize that UC should move to a model where it only accepts graduate students it can fully fund. While this would reduce the number of graduate students, it would increase the quality, and it would counter-act the increased costs of student loans and the loss of research grant money. Furthermore, it is important to stress that UC is one of the biggest producers of PhDs in the world, and there is a growing number of unemployed and under-employed people with PhDs. Although the UC argues that more graduate students are needed in order to staff large undergraduate courses, it is clear that one of the reasons why our PhD students cannot get jobs after they earn their degrees is that there are so many graduate students teaching undergraduate courses. Moreover, by staffing courses with people lacking PhDs, the message is sent out to administrators that anyone can teach undergraduate courses, and so there is no need to hire new professors.

My argument here is not to denigrate or downgrade graduate education; rather, I am arguing that we have to protect graduate students who are often forced to live in poverty as they await a chance to compete in the academic job lottery.

The Big Audit Question

2011-08-01T10:33:00.000-07:00

While the UC administration has tried to portray the state audit as a wasteful use of taxpayer dollars that came up with nothing important, the university will not be able to just walk away from some of the auditor’s finding. In fact, UC is required to report on their compliance with the audit’s recommendations, and one of the biggest issues still remains how the system redistributes tuition dollars and state funds to the campus. As the audit explains, “Because the Office of the President does not provide all money in the general funds and tuition budget to the campuses on a per-student basis (for example, it provides funding for specific research and public service programs to individual campuses), we understand that differences likely will exist. However, we would also expect that the university would be able to identify the reasons for any differences in the per-student base budgets provided to the campuses. The Office of the President stated that variation in base budgets is the cumulative result of decades of budget decisions by the regents and past presidents to achieve the university’s mission of teaching, research, and public service, and that quantifying the impact of these decisions would require an extraordinary amount of analysis by budget staff. The Office of the President believes that such an analysis would not be a good use of limited administrative resources.” Perhaps it would be difficult to document the history behind the redistribution of funds, but it should not be hard to simply explain the current method.

After all, the UC now claims that it will allow the campuses to keep all of the funds they generate on their own, and what they are working on is how to distribute state funds. Yet, in my analysis of several documents generated by the Academic Council and various Senate committees, I have discovered that a battle is being fought between the wealthy and the poorer campuses, and there are many loopholes to the redistribution of state funds and tuition dollars. Even though the campuses will keep their tuition revenue, the new system is supposed to be “revenue neutral,” which means that the current system of covert redistribution will remain.

As the audit indicates, the wealthier campuses are resisting any move to fund the campuses on an equal basis: “The Office of the President further stated that it is a goal of the university that all campuses achieve the level of excellence in teaching, research, and public service achieved by the Berkeley and Los Angeles campuses, although each in its own unique areas, and that while other campuses receive a lower amount of funding per student due to the factors discussed previously, without a significant increase in investment from the State, it would be problematic to equalize funding. It further stated that the university does not wish to jeopardize the achievements of the Berkeley and Los Angeles campuses by shifting funds away to other campuses in an effort to provide an equal amount of the general funds and tuition budget per student.” I quote this passage at length because it reveals the current battle being waged among the different campuses. After all, the UC has always been divided internally between the quest to allow some campuses to be superstars and the countering desire to make sure all campuses flourish. Obviously, the UC cannot have it both ways, and so the tradition is to muddle through and keep everything hidden and non-transparent.

Funding Streams
If we now turn to UCOP’s new policy on funding streams, we learn that, “Beginning in 2011-12, all campus-generated funds will be retained or returned to the source campus. Current policies and practices that distribute a share of fee funds, indirect cost recovery funds, patent revenues, Short-Term Investment Pool earnings, and application fee revenues to the systemwide budget and/or other campuses will be eliminated. Implementation of this principle will require “un-pooling” of General Funds revenues, which will be conducted in a manner that is largely revenue-neutral to campuses upon implementation.” Once again, it is hard to imagine how the new policy will allow the campuses to keep all of their funds, while it remains “largely revenue-neutral.” Perhaps the idea is that the wealthy campuses will make up for any losses by increasing their number of high paying nonresident students and professional students.

The new UCOP policy also indicates that some type of redistribution will still occur through financial aid: “Funding of the undergraduate University Student Aid Program (USAP) will be handled separately and will be an exception to the overarching principle. Each year, campuses will be directed to allocate a specified share of fee revenues to USAP. As needed, campuses may be assessed a specific amount for redistribution to other campuses in order to achieve the Education Financing Model goal of equal loan/work levels across the system.” Thus to pay for the financial aid on the campuses with a high level of aid-eligible students, the campuses with a lower percentage of lower-income students will have to transfer funds to the low-income campuses. It is hard to predict what kind of perverse incentives this new system will produce.

It is important to stress that while UCOP objected to the auditor’s implication that the current system subsidizes wealthier campuses by taking funds away from the campuses with more under-represented students, the new policy report does justify the practice of cross-subsidization: “The high tuition charged to nonresident undergraduates may help fund fellowships for graduate students. Student fee revenue derived from lower-cost disciplines may subsidize instructional equipment purchases in other areas. Student fees for general campus instruction may subsidize the health sciences, while indirect cost recovery on health science research provides a complementary subsidy for general campus activities.” Of course it would be impossible to eliminate the tradition of cross-subsidization, but the question remains whether the university can actually account for who is sending money to whom.

In one of the most clarifying passages, UCOP actually admits that subsidization is occurring between campuses: “When student fees were modest, this consequence was not a major concern. Over the last decade, with student fees rising to levels approaching the level of per-student support from the State, concern has been expressed about the fairness and appropriateness of using student fees derived at one campus to fund increases in faculty salaries and other costs at another campus.” As I have been arguing now for a few years, this type of covert subsidization is the central problem: undergraduate students are subsidizing research faculty on other campuses and parents, students, and taxpayers were never told about this practice.

UCOP can now claim that it is changing this covert funding system, but there are so many loopholes in their new policy that I fear very little will change. Not only has the system failed to determine how to distribute state funds, but it looks like it will be allowing campuses to set their own revenue and enrollment targets: “While these adjustments are intended to be revenue-‐neutral upon implementation, campuses will experience budget increases if revenues rise. Likewise, campuses will be responsible for addressing budget shortfalls if revenues decline.” This final sentence begs the question of what does a campus do if it cannot attract more high-paying nonresident students or professional students.

Ultimately, it appears that very little will change, and the highest-ranked campuses will continue to receive more funding, while the poor campuses will become poorer. This sounds a lot like America writ large.

State Releases Audit of UC System

2011-07-28T14:54:00.000-07:00

After more than a year of research and investigation, the state auditor has released her audit of the UC system. The major findings can be found in the following passage: “the university budgeted widely varying amounts to its 10 campuses. For fiscal year 2009–10, the per-student budget amount ranged from $12,309 for the Santa Barbara campus to $55,186 for the San Francisco campus. Although the university identified four factors that it believes contributed to the differing budget amounts, it did not quantify their effects. The university can also improve the transparency of its financial operations. Although the university publishes annually a report of the campuses’ financial schedules, it could provide other information including beginning and ending balances for individual funds and could publish consistent information for its auxiliary enterprises. We further reported that the Office of the President needs to more precisely track about $1 billion of expenses annually that it currently tracks in a single accounting code—Miscellaneous Services—and that a recent change in university policy allows campuses to subsidize auxiliary enterprises with funding from other sources, despite the intent that they be self-supporting. Finally, we discovered two instances when the university designated $23 million in student funding to pay for capital projects on the Los Angeles campus that were not authorized by the student referendum establishing the fee.” These findings reveal that the UC has been covertly redistributing state funds and student tuition dollars without the knowledge of student, parents, and taxpayers. Moreover, while the UC has improved aspects of its budget transparency, there still is a great deal of money that cannot be traced. In short, the UC fails to act like a public institution because it does not provide important information to the public.

In its response to these criticisms, the UC argues that its budgetary system is simply too complex to explain, and a more detailed analysis of its spending and funding would require many staff hours and years to gather: “I cannot help but comment on the extraordinary time and effort – and considerable expense on the part of the BSA and the University – that went into this audit, which in the end found only minor issues to address. We are proud of the fact that we have come through this review with validation of so many of our procedures and policies which in recent years have come under considerable public scrutiny. But, at what cost? I urge the Legislative Audit Committee to require those who seek to use the limited audit resources of the State to provide more evidence of malfeasance than innuendo and presupposition behind their requests.” The UC clearly does not get it if they think that the audit only dealt with “minor issues” like the secret redistribution of state funds and student tuition or the inability of the system to track its own expenses.

In response to UC’s response, the auditor retorts: “We appreciate the university’s concern about the trade‐off in staff time to implement this recommendation. In that light, the university may wish to consider implementing a Web site similar to the one we created that contains supplemental accounting information we obtained during this audit. On our Web site, we present a link (www.bsa.ca.gov/reports/2010‐105/) to information related to public funding from the university’s corporate financial system related to fund categories; fund groups; and funds that includes beginning balances, revenues, expenses, transfers, and ending balances. Our information technology team created this Web site using fewer than 60 hours of staff time. We therefore fail to see why the university believes it needs between 12 and 18 months to review and implement this recommendation.” As the auditor implies, on the one hand, the system says that it highly transparent, and at the same time, they argue that they cannot afford to clarify their complicated budgetary system.

In one of the more surprising findings in the audit, we found out that the regents have the authority to use any student voted fees for any purpose the regents want to pursue: “According to the Office of the President, referendum results are advisory under Section 84.20 of the policy, and the regents retain ultimate authority under the State Constitution to impose or modify any and all student fees, including those established by campus‐based referenda.” So if the students vote to fund a learning center, the regents can use the money to fund a new athletic center.

Speaking of athletics, the regents have also authorized a change in policy that allows self-supporting auxiliaries to be funded by multiple funding sources: “Campuses are provided the flexibility to organize and manage their auxiliary operations to meet their individual needs under the University’s Business and Finance Bulletin A-72, Establishment of Auxiliary Enterprises (BFB-72). Generally, auxiliaries are self-supporting, although they are not required to be self-supporting. Other appropriate funds can be used to support auxiliary organizations at the discretion of the chancellor. Donor gifts are an example of funds from other appropriate sources that may be used to support an auxiliary organization. Funds from other sources are only used when permitted.” In other words, self-supporting entities don’t have to be self-supporting.

Turning to the most controversial aspect of the report, the auditor points out that the campuses serving the most under-represented students also get the lowest level of findings. While it is understandable that the university objects to this conclusion, they cannot object to the facts. Whatever the cause, the reality is that Black and Hispanic students may be receiving an inferior education because their tuition dollars are going to support non-under-represented professional students on other campuses. A more accurate description of this situation is that a side-effect of undergraduates subsidizing graduate and professional students on other campuses is that under-represented students are being under-funded.

As the report indicates, the UC is going through the process of changing its funding streams so that campuses get to keep their tuition dollars and other revenue; however, the university still has not figured out what to do about state funds, which make up for most of the inequity caused by redistribution. Furthermore, the UC has argued that the new funding model will be revenue neutral, which means that the wealthy campuses will remain wealthy, while the poor campuses stay poor.

On a positive note, the auditor calls for the UC to distinguish among the costs of undergraduate, graduate, and professional education: “As part of its reexamination of the base budget, it should . . . identify the amount of revenues from the general funds and tuition budget that each campus receives for specific types of students (such as undergraduate, graduate, and health sciences) and explain any differences in the amount provided per student among the campuses.” If the UC does clarify these difference, we can begin to see how the university is really spending its money.

More later.

Click here for UC’s counter-productive spin

Our Irrational Higher Ed Economy

2011-07-19T09:32:00.000-07:00

David Segal's New York Times article on the economics of law schools highlights many of the same factors that we presently see facing the University of California and other universities and colleges: while the price for higher education continues to escalate, the quality of instruction is being downsized. In the case of law schools, Segal reports that many schools are increasing their enrollments and raising their tuition because there is such a high demand from students, and even though many students with large loans can not find jobs when they graduate, schools are not reducing the supply: “Legal diplomas have such allure that law schools have been able to jack up tuition four times faster than the soaring cost of college. And many law schools have added students to their incoming classes — a step that, for them, means almost pure profits — even during the worst recession in the legal profession’s history.”

Segal hints that one reason why some law schools are increasing their price tag and their enrollments is that it helps them raise their standing in the all-important U.S. News & World Report rankings: “There are many reasons for this ever-climbing sticker price, but the most bizarre comes courtesy of the highly influential US News rankings. Part of the US News algorithm is a figure called expenditures per student, which is essentially the sum that a school spends on teacher salaries, libraries and other education expenses, divided by the number of students.” As I have pointed out before, this standard method of university accounting not only has no real relation to educational quality, but it pushes schools to increase their budgets by supporting unnecessary expenses like new administrative positions.

Just as the counter-productive U.S. News ranking system distorts the priorities of higher education institutions, an equally faulty bond rating system pushes schools to increase tuition and enrollments: “Like all stand-alone institutions, N.Y.L.S. is even more dependent on student tuition than those attached to universities, and Moody’s highlighted this fact in its 2006 appraisal of the school’s bonds. Under a section about potential “challenges” that could lead to a downgrade, Moody’s cited “significant and sustained deterioration of student market position.”” In other words, schools are told that if they do not increase their revenue generated from students, the schools’ will see their bond ratings go down and their interest rates go up.
Thus in the pursuit of higher rankings and lower interest rates, universities and colleges force more students to take on higher debt during a time when there are fewer jobs. The central decisions of our institutions of higher education are therefore being determined by faulty rating and ranking systems in which no one really believes and everyone uses. Welcome to the irrational economy and the death of the middle class.

A Tale of Two UCs

2011-07-13T12:45:00.000-07:00

As we get ready for another large tuition increase, and we read about the elimination of several UC degree programs, the bond rating agency, Fitch, has re-affirmed the university’s strong fiscal standing. While the bond raters have been wrong in the past, we can still read the latest analysis of UC’s fiscal health as indicating the real priorities of the administration.

Since the UC has decided to help reduce its pension liability by selling about $1 billion of commercial paper (debt), it has asked to have its financial status rated. As I have argued in the past, due to the UCs high level of debt, it is dependent on getting a high rating from the bond raters so that it can receive a low interest rate, and one result of this dependency on debt is that the bond raters can tell the university how they think the system should structure its finances. Moreover, even though the bond raters pretend to be neutral and free of any ideology, they covertly push the same agenda that we find in the World Bank and the International Monetary fund. This agenda pushes for the privatization of public entities, a taking on of huge debts, and the deregulation of markets. The plan for the UC set out by Fitch is thus in many ways the global plan being pushed by conservatives and bond raters.

In reading the summary of Fitch’s report, we learn that the university has received a high rating because of, “UC's substantial level of balance sheet resources and liquidity; diverse revenue base, which enables the system to weather temporary weakness in any one funding source; and manageable debt burden, despite the expansive, capital intensive nature of its operations.” In other words, UC has many different revenue streams, and although it has a high level of debt, over $14 billion, it has the resources to take care of its financial obligations.

According to Fitch, one of the main signs of UC’s fiscal health is its ability to constantly raise tuition: “Recent reductions in state appropriations, and the potential for additional cuts through the intermediate term, are partially mitigated by the university's still considerable, though now more limited, ability to raise tuition and fees, and its overall limited reliance on state operating support.” In other words, the UC should not worry too much about losing state funds because it has shown a willingness to raise tuition. In fact, this same logic of privatization is driving the state’s reduction of funding for the UC; since the Democrats believe they cannot raise taxes, they cut the UC, which they know will turn around and raise tuition.

Not only does the state feel comfortable reducing the university’s funding, but they are planning to borrow another $1 billion from the UC system, and the reason why the administration will accept this deal is that the university will turn a profit by lending money to the state. This deal make sense on paper because due to UC’s high bond rating and the state’s low rating, the state has to pay a higher interest rate to borrow money, and if the UC lends money, the state can improve its bond rating, and the UC can profit from the difference between its low interest rate and the state’s high interest rate.

What is left out of this equation is that students are paying 6.8% to take out their loans, and these loans not only allow the UC to raise tuition, but the money generated from tuition can be leant to the state at something like 5%, which is better than the 2-3% the UC gets from putting tuition dollars into its Short Term Investment Pool. If we connect the dots, we see that students are lending money to the state, so that the university can bring in more money, but the end result is that the students will have to pay for this interest deal.

Perhaps the biggest casualty of this constant escalation of tuition is the middle class. While students whose parents make below $50,000 will have their tuition covered by financial aid, other students who are not rich and do not qualify for aid will end up paying more and taking out huge loans. In fact, over the period of 1999 to 2009, the percentage of UC students whose parents combined income is between $50,000 and $150,000 has gone from 50% to 40%.

As I have stressed before, almost everything the UC does loses money, and so the only stable source of income is student tuition dollars. Ultimately, the state and the bond raters are telling the UC to screw the middle class, and the UC is obliging on a regular basis.

UC’s Steady Move to Privatization

2011-07-07T09:05:00.000-07:00

At the next UC regents meeting, a proposal will be presented to increase tuition by 9.6%, which will be added to the previously accepted 8% increase for a total increase of 17.6%. The official reason for this increase is that the state has reduced UC funding by $650 million. Moreover, the anticipated state cut has also pushed UC Berkeley, UCLA, and UCSD to increase its nonresident student enrollments, and in the case of Berkeley, about a third of its new students are coming from outside of California, and these nonresident students are very attractive because they full tuition without any financial aid. This is what privatization looks look.

By increasing the cost of attendance and decreasing the percentage of Californian students, the UC is following in the footsteps of Michigan and Virginia, and the result will soon be that a larger proportion of students will come from outside of California and more of them will come from families in the top income bracket. However, unlike Michigan and Virginia, the UC is still dedicated to using financial aid to make school affordable for lower-income and lower-middle class students. Of course, something has to give here, and it is the Californian middle-class students who cannot afford the increased tuition but do not qualify for financial aid who will find themselves excluded from a UC education.

The UC likes to argue that it has no choice but to raise tuition and chase nonresident students, but as I have shown before, the administration’s logic is flawed. If the university wanted to, it could decrease tuition and increase student enrollments, but this would require a very different funding model. Instead of having undergraduates subsidize graduate education, professional education, research, and administration, the system could make sure that each sector could support itself. This process would require budgetary transparency and an increase in funding for for graduate and professional students.

When in the past I have called for this type of budgeting, I have been told that the only way to maintain UC’s excellence is by hiding its funding process from the public and everyone else. In other words, if people knew that the UC was jacking up undergraduate tuition in order to support expensive graduate and research programs, citizens would rebel and call for the defunding of the university. However, my response is that only a transparent budget would allow us to see if there really are non-essential costs that could be eliminated. In fact, part of being a public university is allowing the public to see how you really spend your funds.

Yet, while professors and administrators often complain about the creeping privatization of the UC system, they still want to be paid like they are working for private schools. Moreover, the fear of losing star professors to elite private universities pushes the system to pay some of its employees at a high market rate, while all of the other faculty members and workers are asked to do more for less. By allowing individual faculty members to negotiate private deals with administrators, the system not only creates collusion between the faculty and the administration, but it also drives up costs as it eliminates transparency and equity.

This system of private deals at a public university is going to get even worse if the regents approve of the plan of letting the president decide on his own about employee compensation increases. This new system will not only decrease transparency, but it will also increase inequality as the president garners support by handing out raises. Public institutions do not function this way; rather, this is how autocrats rise to power and maintain their control. If we really want a public university, all of us have to fight for it.

Brown Delivers a Republican Budget without Republicans

2011-06-28T10:26:00.000-07:00

In any other year, the new budget plan supported by Governor Brown and the Democrats in the legislature would have been considered a major victory for fiscal conservatives. Not only does the budget reduce vital services by billions of dollars, but it does virtually nothing to increase future revenues. In fact, in the great tradition of Californian governors, Brown can only make his plan seem balanced by projecting wildly optimistic tax returns, and if $4 billion new dollars don't come in, another round of budget cuts will be triggered.

What I do not understand is why the progressive caucus in the legislature did not try to block the deal and put on the table progressive solutions. Perhaps our only hope is that Brown will work with unions to put progressive taxes on a special election ballot. Brown has even hinted that he might support modifying Prop 13.

In terms of the UC, the news is mixed. We did not get the full $1 billion cut, but more reductions will occur if the rosy tax revenue predictions do not come to fruition. Of course, the total cut of $650 million will justify a new round of tuition increases and a faster slide towards privatization.

The State of the State: A Progressive Solution

2011-06-21T15:11:00.000-07:00

The current California budget conflict is unlike any other; not only has the governor vetoed an entire state budget for the first time in history, but it is unclear whether his own party knew that he was going to reject their complicated budget proposal. I personally find it hard to believe that the Democratic leadership did not know that the governor was going to veto their plan. After all, I predicted that the legislators would come up with some plan just to make sure they could meet their June 15th deadline in order to get their paychecks. I also know that the governor is dead set on having citizens vote on tax extensions, and he believes that he can get the four Republican votes he needs to put the taxes on the ballot; however, everything has become complicated by the new voting districts, which give the Democrats the hope that they can win a super-majority in the legislature, and therefore they may not need the Republicans at all in the future.

As I have previously written, all of the plans being discussed are bad, and if Brown decides to use the unions to fund a petition-gathering effort, the unions should insist that the current tax extensions be discarded, and a whole new set of progressive taxes must be presented. Not only would it be easier to pass a tax on the wealthiest Californians, but it would be more just and fair. Moreover, a tax on oil extraction to increase funding for higher education would also be a popular tax, and it is even worth the effort to put a majority vote for new revenue on the ballot.

The best possible strategy would be for Brown to pass a modified version of the budget he has just vetoed and then work with the unions to place progressive taxes on a special election ballot. Brown could also use the new projected tax revenue to reduce the state cuts to higher education and other needed public services. If the unions work together and present a united front to the governor, we can push for a progressive solution to help all Californians.

Jerry Brown’s Bad Budget Deal

2011-06-10T08:19:00.000-07:00

It looks very possible that Governor Brown will get enough Republican votes next week to pass a state budget and put tax extensions on a special election ballot for September. The remaining stumbling block is the extension of the current taxes, which are set to expire July 1, and Brown wants them to continue until the special election. Here is why I think the whole budget deal is very bad:

1. Brown has basically endorsed the conservative argument that our state and national fiscal problems are due to governmental over-spending. While he is calling for a vote on the tax extensions, his budget relies on deep cuts to needed social programs coupled with a scaling back of pensions and an elimination of several state offices. In other words, he is endorsing the conservative push for austerity during a time when we need increased support for jobs and benefits.

2. It is possible that the voters will reject the tax extensions, and then we move to an all-cuts budget, which only an extreme right-wing proponent of government and taxes could support. Once again, it has taken a Democrat to fulfill Republican promises.

3. In order to push for the tax extensions, which place most of the burden on struggling middle-class and lower-class workers, unions and Democratic politicians will have to spend huge sums of money fighting for a very bad deal.

4. Even if the tax extensions do pass, they serve as a temporary fix, and they do not address the fundamental revenue problem of the state. Moreover, if the budget comes with a spending cap, the horrible cuts to social programs will be locked in.

The only solution is for the Democrats to simply refuse to sign onto any budget deal and to turn their attention to a special election to support real progressive solutions like the end of the rule requiring a super majority vote on taxes in the legislature.

How the UC Calculates the Instructional Cost and Funding per Student

2011-05-24T06:56:00.000-07:00

In response to my research on how much it costs to educate each undergraduate student in the UC system, the UCOP budget office has written a report entitled, “Cost of Education Calculations at the University of California.” While I am waiting to receive responses to questions I have recently posed to the writers of the study, I wanted to stress some important facts. First of all, although they argue that they have been highly transparent in their budget information, it is apparent that this important information has never been posted on any of their web sites. Second, as you will see from the excerpts that I will present below, these budgetary calculations are very complex and counter-intuitive.

The two main topics of this report regard how much funds the UC receives per student and how much it spends on each additional student. I have been arguing that the UC already makes a healthy profit on each student, and so there is no reason to raise tuition or reduce enrollments. In fact, according to my calculations, it is financial suicide to reduce enrollments since undergraduate subsidize everything else going on at the university. To refute my claims, UCOP argues that I do not understand how the UC calculates state support, student fees, and the cost of educating each additional student.

Starting with the latter topic, the UC argues that the marginal cost to educate each additional student in 2009-10 was calculated to be $16,574. To get this amount, they add together the following average costs:

• Faculty salaries
• Calculated as the average annual salary of new professors assuming a student-faculty ratio of 18.7:1. In other words, for each 18.7 students, the University needs funding to hire one additional professor.
• The average salary of new faculty hired during 2008-09 was $95,657.
• The faculty salary component of marginal cost for 2009-10 was $5,115 per student.

• Faculty benefits
• Calculated as the base benefit amount of health, dental, vision, life, and disability insurance for new faculty in the current year
• In 2009-10, the annual base benefit amount per new faculty FTE was $17,577.
• The faculty benefits component of marginal cost for 2009-10 was $940 per student.

• Teaching assistant (TA) salaries
• Calculated as the average annual salary, not including mandatory fee remissions, of a full-time TA and a student-TA ratio of 62:1.
• In 2009-10, the average 2008-09 TA salary was $33,274.
• The teaching assistant salary component of marginal cost for 2009-10 was $537 per student.

• Instructional equipment
• Calculated as the average annual cost to replace depreciated instructional equipment.
• The instructional equipment need estimated for 2006-07 and used in the 2009-10 marginal cost calculation was $103,867,314.
• The instructional equipment component of marginal cost for 2009-10 was $523 per student.

• Instructional support
• Includes technology and departmental support.
• In 2009-10, the instructional support component of marginal cost was $4,284 per student.

• Academic support
• Calculated based on average expenditures for libraries, general campus vivaria, and other related expenses. Does not include health science clinics and vivaria, demonstration schools, museums and galleries, and intercollegiate athletics.
• The total budgeted amount for academic support in 2008-09 used in the 2009-10 marginal cost calculation was $267,781,860.
• The 2009-10 marginal cost per student of academic support was $1,349.

• Student services
• Calculated based on average expenditures for admissions and financial aid administration, counseling and career guidance, student activities, and other educational services. Does not include student health program costs.
• The total budgeted amount for student services in 2008-09 used in the 2009-10 marginal cost calculation was $247,255,543.
• The 2009-10 marginal cost per student of student services was $1,246.

• Institutional support
• Calculated based on average expenditures for general administrative services (such as computer centers, information systems, and personnel) and fiscal operations (accounting, audit, and contract and grant administration); executive management, logistical services, risk mitigation and controls, and community relations are excluded and not funded by the State.
• The total budgeted amount for institutional support in 2008-09 used in the 2009-10 marginal cost calculation was $144,084,750.
• The 2009-10 marginal cost per student of institutional support was $726.

• Operation and maintenance of plant
• Calculated based on average expenditures for maintenance of building and grounds, utilities, refuse, janitorial service, and fire departments. Does not include plant administration and non-instruction and research space.
• The total budgeted amount for operation and maintenance in 2008-09 used in the 2009-10 marginal cost calculation was $367,666,404.
• The 2009-10 marginal cost per student of operation and maintenance was $1,853.

I have not edited any of these figures, and so we learn that the UC’s estimation of the direct instructional cost is actually lower than my calculation of $9,000. The question then is why is their total cost estimate so much higher, and the answer is that they assume that the indirect instructional costs make up over 60% of the total cost; in fact, they argue that the university pays almost the same amount for faculty salaries as it does for departmental support.

While I have several questions concerning this method of calculation, if we do accept it, we still have to ask how much funding the university brings in per student. Using UC’s own budget numbers, I have calculated that each student brings in a total of $23,000 in state funds and tuition dollars, but the budget office disputes this figure because they argue that much of the money coming from the state goes to programs that are unrelated to educating students: “A sizable portion of the funding provided by the State has little or nothing to do with educating enrolled students, but rather supports organized research, public service, or financial aid, all of which are part of UC’s mission, but none of which should be included in a calculation of resources available for instructional programs.” I do think this position would surprise many legislators and citizens who assume that the budget for “general instruction” would go to things having to do with educating students.

In order to calculate the state support per student, I simply took the total money the UC got from the state this year ($3 billion) and divided it by the total number of resident students (200,000), but the UC uses a much more complex formula: “The figure represents the estimated total funding from State General Funds, UC General Funds, and student fees on a per-student (again, general campus only) basis that is available to support general campus instruction (faculty salaries and benefits, instructional support, instructional equipment and technology) and support activities such as libraries, student services, administration, and operation and maintenance of plant. It excludes financial aid, as that is an expenditure to support access, not an expenditure to provide the instructional program. The State and UC General Fund components also exclude funding for health sciences instruction, research, and public service, as well as the health sciences, research, and public service components of support activities. The sum of the general campus share of State, UC, and student funding is divided by all general campus students—resident and nonresident—since the average cost of education is the same for residents and nonresidents alike.” If you have a hard time understanding this formula, you are not alone. Firstly, it should be pointed out that UCOP is including nonresident students in state support, and it also includes summer session when it counts student FTE. Secondly, it looks like they put together all of their sources of funding for the general fund, and then they divide it by the number of general campus students, but to do this, they have to subtract funding for health sciences, research, and public service. My big question here concerns how they calculate the cost of the things they subtract; in other words, what part of the health sciences, research, and public service is paid for by the state?

Since the budget office argues that much of the state funds go to non-instructional activities, they estimate that the state funding per student is under $10,000: “As noted above, the average cost of instruction should not include non-instructional costs such as health science instruction, research, public service, or non-instructional support activities; therefore, we remove these items from the numerator. For the non-instructional share of support activities, we determine the proportion of core mission activities (instruction/research and public service) that is non-instructional and remove the corresponding share from support activities.” Once again these calculations are centered on a judgment call over what proportion of the core mission budget is non-instructional; in other words, they have to estimate which parts of shared administration and staffing should be supported by the state and the students.

From my perspective, this report shows that students and the state are paying for the enormous increase in administrative costs on the campuses, and thus the economic solution is not to reduce enrollments or raise tuition; rather, the solution has to be to decrease the cost of non-instructional services. Faculty, citizens, students, and workers concerned about instruction and research should question these budgetary policies.

Will the Regents Protect the Middle Class?

2011-05-17T06:59:00.000-07:00

When the UC Regents meet this week, they will be asked to endorse a plan to raise tuition 40% next year if the state reduces the UC budget by an additional $500 million, which will occur if tax extensions are not approved. The Office of the President will also present a modified financial aid plan that funds the tuition increases for families making less than $120,000 a year. The idea here is that middle-class Californians will be protected against giant tuition increases because these increases will be offset by additional financial aid, but we must ask how is middle class being defined here.

If a married couple is comprised of two wage earners, and both people make $61,000 a year, this family does not qualify for the UC financial aid plan, but can they really afford tuition at $15,000 and a total cost of over $35,000 including room and board? Not only does California continue to have one of the highest costs of living in the nation, but with the loss of home values and 401ks since 2006, most middle-class families will have a very hard time sending their kids to a UC.

Perhaps most regents do not understand this problem because they are multimillionaires who simply are out of touch with the middle class. Likewise, with the steady increase in salaries of UC administrators, we cannot expect people making over $200,000 a year to understand the plight of middle-class people earning $61,000. With the rising income inequality outside and inside of the UC system, the ability of people to understand the hardships of others is being diminished.

In the case of the UC system, it is the huge growth of managers and their salaries on the campuses, which is a major part of the problem and solution. While the number of employees over the last twenty years has gone up 47%, the number of managers on the campuses has gone up 220%. Moreover, during the last three years of our “budget crisis,” the number of administrators making over $200,000 has grown considerably.

It should be clear that faculty, students, workers, and unions should join together to demand a halt to tuition increases, an increase in state funding, and a push for a major reduction of administrative costs.

UC Considering Raising Tuition 40%

2011-05-10T11:09:00.000-07:00

While the UC has already decided to raise tuition 8% next year, UCOP is warning that if the university budget is cut by another $500 million, they will have to raise tuition and fees by an additional 32%. You can find this information by going to the agenda for next week’s regents meeting and clicking here. http://www.universityofcalifornia.edu/regents/regmeet/may11/f5.pdf

The regents will also be considering a new financial aid formula that moves the system towards a high tuition/high aid model.

The Battle Over Online Education Continues

2011-05-03T07:37:00.000-07:00

UC-AFT has put together a web page with links to several articles regarding the UC push for online education. We have also outlined some of the ways we are seeking to use the collective bargaining process to restrict the use of distance education and to protect the rights and jobs of lecturers. Since we are currently bargaining the Unit 18 contract, we have the opportunity to engage the administration in a discussion of how the move to online courses will affect faculty workload, intellectual property, merit review, and promotion.

While it is clear that UC is trying to cut costs and generate profits by moving large enrollment courses online, we know that most research university online programs have failed because of the high cost and poor student retention. Distance Education also waters down the prestige of a university degree; after all, why should someone pay $40,000 to sit at home in front of a computer.

Of course, one of the risks of moving classes online is that the faculty can become subject to surveillance and political intimidation. This threat has just become reality at the University of Missouri where an instructor has lost his job after a video of his class appeared to show him advocating violence in labor activism. According to the Inside Higher Ed story, the infamous Right-wing blogger, Andrew Breitbart, the same person who brought down ACORN and Shirley Sherrord, obtained the video from a student who copied it off of the university’s online course management system. The video was then reedited, and although university officials acknowledged this manipulation, they still forced the non-tenure-track instructor to resign.

We see in this example the failure of academic freedom to protect instructors and students, and we also learn here how online courses open faculty to public scrutiny and political witch hunts. In this particular case, students were motivated by a conservative group to post video of their teachers endorsing unions and other forms of labor activism. This example is similar to what happened at UCLA a few years ago when a conservative alumni group offered money for students who recorded their professors saying anti-American or anti-Israel things. Not only is Big Brother watching, but with new digital media, little brother also has access to our private words and actions.

Online courses then not only get rid of the need for “bricks and mortar,” but they also remove any sense of education as a protected sphere. Since anyone can now copy and edit digital recordings, online lectures and course material become subject to political manipulation. While the UC faculty will be assured that privacy protections will be in place for online courses, these safeguards will be easily transgressed by any high-tech political hack.

In related news, UC Berkeley is contemplating putting student evaluations online, and this move will also render faculty vulnerable to outside political manipulation. As we have seen at UCLA, disgruntled students can try to sabotage their professors by claiming that these teachers are Left-wing ideologues, and once these evaluations go online, you cannot control whose hands they end up in. Online student evaluations also turn teaching into a market where students search for the easiest classes or the most entertaining lectures.

It should be clear that faculty and students should resist this move to place all of our views and experiences online.

Update on Campus Funds

2011-04-26T10:35:00.000-07:00

I have recently updated my information on how much each campus is funded per student to include the latest 2009-10 information. As I have previously pointed out, UCOP redistributes state funds to the campuses in a very unequal way, and although they are now going to let the campuses keep their student fees and tuition, most of the uneven distribution is in the allocation of state funds. Leaving aside UCSF for the moment, the biggest differences are between UCSC and UCLA. In 2009-10, UCLA received $29,775 per student ($11,720 in tuition and $18,035 from the state), while UCSC only got $16,516 per student ($8,461 from tuition and $8,055 from the state). (I have deducted financial aid from all of these figures). For a spreadsheet on all of the campuses click here.

While UCSF received $12,189 in tuition and $76,120 per student from the state for a total of $88,309 per student, the average of the other campuses was $9,825 from tuition/fees and $13,280 from the state for a total of $23,108 per student. It is important to point out that these amounts do not include funding from the campuses’ general funds, and the state support does not include Cal Grants. I would also like to add that the average financial aid per student dollar is 21% and not 33%, which the university often claims.

These statistics bring up several questions. First of all, why doesn’t the state and the UC administration differentiate between undergraduate and graduate costs and revenues in its statistics? A related question concerns whether it is ethical and even legal for students and parents to pay for tuition on one campus when the funds are spent on another campus? Also, it appears that the different cost between undergraduate and graduate education only accounts for part of the differential funding of the campuses, and so we must ask, what else determines this redistribution of wealth?

As I have argued before, this system of UCOP redistributing funding is even more important than the level of support of funding from the state. While we need to maintain our state support, we have to realize that even if the state increases UC funding, UCOP might still starve some of the campuses. Furthermore, during this time of decreased state funding, it becomes even more vital to demand transparency and fairness in the distribution of resources.

The New Funding Model for the UC System

2011-04-20T09:05:00.001-07:00

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.

Online Education and the End of UC Education

2011-04-14T08:33:00.000-07:00

As the UC moves to put high-enrollment courses online, professors need to wake up and see what is about to transpire. Even though the administration said it would only go ahead with the project if it raised funds from private sources, it has now been leaked by the Chronicle of Higher Education that the university will borrow seven million dollars from itself. First of all, it is important to note that this new funding model goes against the requirement of the academic council, and it appears that the faculty only found out about this plan when it was discussed in the national media. Thus, we should read this secret plan for self-borrowing as a sign that the administration intends to go ahead with its online project regardless of what the faculty senate says.

More troubling is that the target classes for the first round of the pilot program will be courses taught at all of the undergraduate campuses. This move is the first step in getting rid of “departmental duplication.” If senate faculty think that the only people who will be hurt here are the lecturers and graduate students who are currently teaching most of the required undergraduate courses, they should think again. Once the UC establishes that it can teach the same Spanish class on all of its campuses, there is no longer a need for a Spanish department on each campus. Moreover, since language courses taught by lecturers and graduate students cost a fraction of the cost of courses taught by senate faculty, language departments will lose their cash cows and their source for cross subsidization. In short, language departments will be bankrupt and a prime target for departmental closure.

It is vital to stress that when classes are taught on a system-wide basis, it becomes unclear who controls the courses and the funding. At a recent conference on higher education, I heard how at a research university, the central administration has simply stepped in to staff and manage system-wide courses. While this may not be the intention of the Office of the President, we must remember that this entire initiative has sidestepped shared governance.

Another possibility is that once departments put their classes online, they will be taxed at a high rate by the system and their own campuses. For instance, at the University of Nebraska, departments once kept 92% of their profits from distance education, but now, they keep less that 40%, and this money fails to cover the cost of staffing the courses. Moreover, once departments start running a deficit, they are prime targets for restructuring and the laying off tenured professors.

If you think this is a delusional conspiracy, you should look at the way language programs throughout the UC and the country are being reduced or eliminated by simply not filling vacant tenure-track lines. By using a rhetoric of crisis, administrators are getting faculty to participate in their own downsizing. The first step was to use money from the Gates foundation to bribe faculty to come up with online courses. Since many faculty have obliged, the university can now say that it has faculty buy-in, and so the project should be extended to all impacted lower-division courses. This is simply a plan for financial suicide and the covert effacement of shared governances.

In fact, I have spoken with several people who are participating in the development of the pilot courses, and they are all good people thinking that they can make a positive contribution, but they all fail to see how their good intentions can be misused by the administration. For some reason the faculty believe they can control the process, while every step of the way, this project has been dictated by the central administration.

We should start a letter writing campaign to President Yudof explaining why we do not think this online project will save the university. By the way, total revenue in the UC has gone up by $3 billion during the last three years of our fiscal crisis.

Brown Threatens to Double UC Tuition

2011-04-07T06:38:00.000-07:00

Governor Brown predicts that if the state does not pass tax extensions in June, tuition for in-state University of California students could go from $12,000 to $20,000 or even $25,000 next year. This claim shows that Brown has bought into President Yudof’s rhetoric, and now both are using the same misguided strategy. As I have argued in the past, Yudof believes that his only way of working with the state is to threaten Sacramento with cutting enrollments or raising tuition. The end result of this strategy is that students always suffer, and the UC does not have to look at its own internal issues.
In contrast to popular belief, the UC brings in extra revenue for each student it enrolls, and therefore, it makes no financial or educational sense to reduce enrollments. In fact, I have recently presented to the Office of the President a new calculation of how much the UC profits from each additional student. While I have not heard back from UCOP yet, my calculations show that the administration has been misrepresenting UC’s financial status to not only the public and the state, but also to the Regents. As you will read below, virtually all of the statistics that UCOP presented at the last Regents meeting regarding student enrollment and finances are way off the mark, and this information has led some Regents to believe that the UC can simply give up on state funding. Moreover, the same faulty information is being used by the Governor to threaten a doubling of student tuition.

How Much Does the State Really Give the UC Per Student
The University of California administration often argues that the state support for UC students has gone down by over 50% in the last twenty years, but looking at the actual enrollment and funding numbers (the sources are listed at the end of this entry), we find that the per student state funding in 1990 was $13,690 (there were 156,000 students and the state gave the UC $2.1 billion). In 2010-11, the per student state funding is $15,000 (200,00 resident students and the state funding is $3 billion). In terms of student fees and tuition, the UC will receive this year $1.9 billion in tuition and fees (after paying out financial aid), and there are 215,000 students (resident and non resident, graduate, undergraduate, and professional); thus the current per student tuition revenue is $8,267. If the state reduces its support to $2.1 billion, which is what the Governor is threatening will happen if tax extensions are not passed, the per student state support will be just over $10,000, and the total revenue per student will be about $19,000. Furthermore, if the UC gets $2.6 billion from the state, the per student support for resident undergraduate and graduate students will be $13,000. In any case, it is incorrect to say that students will be paying more than the state. In fact, currently, the UC is scheduled to receive $21,260 per student in combined state funds and student tuition (this is based on state support of $2.6 billion). If we add in an average of $2,080 per student out of the general fund, this gives a total of $23,340 of revenue per student (the UCOP 2011-12 budget presentation graph puts this number at $17,220). As I told members of the UCOP budget staff, by downplaying these numbers, the administration motivates Regents to claim that we can simply walk away from state funding.

How Much Profit Does UC Make on Each Additional Student?
I have also showed UCOP how the worst thing the UC could do is to decrease its undergraduate enrollments because my analysis shows that UC makes a profit off of undergraduate student it enrolls. According to UC’s own numbers in its accountability report, in 2007-08, there were 3,008 Lecturers (average appointment was 51%) representing 1,550 full-time equivalent positions (fte), and they generated 1,554 student credit hours per lecturer fte at a cost of $34 per student credit hour (the average lecturer FTE salary was $54,000 in 2009-10). (I am using the most recent salary data from 2009-2010 and the most recent student credit hour data, which is from 2007-08. If anything, faculty are teaching more student credit hours now, so my calculations are highly conservative).

If we now look at senate faculty, in 2007-08, there were 10,150 senate faculty FTE averaging 445 student credit hours per fte. Senate fauclty had an average salary of $110,000 and cost $247 per student credit (student credit hours are a superior way of calculating cost because they takes into account class size and course units). Last year, undergraduate students averaged 45 credit hours per year, and since two thirds of the student credit hours are taught by senate faculty, we can calculate that the total direct instructional cost is $7,920; it cost $7,410 for senate faculty to generate 30 student credit hours and $510 for lecturers to produce 15 student credit hours. If we add 20% of salary for benefits, we get $9,504. (This number is high because half of the lecturers do not get benefits, and the senate faculty who teach most of the undergraduate courses do not make as much as the senate faculty teaching mostly graduate courses. Also, UC does not count courses taught by graduate students and instead often credits graduate student taught courses to senate faculty who are the teachers of record, and this inflates the cost since graduate students get so much less money than senate faculty).

Using the conservative instructional cost of $9,504 and the current revenue per student of $23,340 (calculated above), the UC generates $13,836 per student to pay for related and unrelated costs. It is clear that due to the economies of scale, each time you add more students, you do not hire another administrator or pay more for utilities, the library, or maintenance, and so it makes no financial sense to reduce enrollments, especially for lower-division undergraduates who are by far the least costly students. Also, if you reduce enrollments, you do not take down libraries or stop paying your electric bills.

Now, if we want to figure the indirect cost per student, one way to do this would be to determine how much each campus spends on its core mission. For instance, the UCLA College spends 70% of its general funds budget on faculty salaries and benefits (this includes senate faculty, lecturers, and grad students) and 16% on staff and 11% on operational expenditures, so the indirect cost is 27-30%. If we take the conservative indirect cost of 30%, and we add it to my direct instructional cost per student of $9,504, then the total cost is now $12,355. Once again, it makes no financial sense for the UC to reduce enrollment since it brings in an extra $10,985 per undergraduate student. In the case of nonresident students, the UC brings in an extra $23,450 per student. Even if the state decides to reduce UC funding by a billion dollars next year, the UC will still bring in a profit of $8,000 per student.

While I am still working hard to get the state not to cut the UC budget, I also recognize that most of the UC’s financial problems are internal. The quandary is that even though it is irrational for the UC to double tuition if the state doubles its budget cut, I believe this is exactly what will happen because no one is dealing with actual numbers. We all need to confront the truth and push for budget transparency. Moreover, the regents should know this information.

Sources:
You can determine the total state funding for UC by combining these:
http://192.234.213.2/sections/econ_fiscal/Historical_Expenditures_Pivot.xls
http://www.cpec.ca.gov/completereports/2004reports/04-20/21.PDF
http://www.cpec.ca.gov/FiscalData/FundingTable.ASP

Enrollment data:
2000 to 2008 here: http://www.universityofcalifornia.edu/accountability/index.php?in=6.2&source=uw
1964 to 2006 here: http://budget.ucop.edu/enroll/actfte.pdf
2009 projections are here: http://repository.ucop.edu/cgi/viewcontent.cgi?article=1000&context=enrllmt_lrp_reports

The average student credit hours can be found at: https://sisds.ucdavis.edu/aboutinstruction.htm

Average salaries for professors 2011: http://www.universityofcalifornia.edu/regents/regmeet/jan11/joint.pdf
For the average cost of benefits for faculty serving the core missions, see:
“The University of California 2008-09 Budget For Current Operations Summary of he Budget Request.”

A Progressive Tax to Save California: How Unions Can Push Governor Brown to do the Right Thing

2011-03-30T07:12:00.001-07:00

California has the largest economy of any state in America with a gross product of just over 1.9 trillion dollars. However, next year, Californians are going to spend less than $85 billion on the state budget, and there is still a $12 billion deficit. These statistics mean that the total state budget is less than 5% of the state economy, and the deficit is less than 1%, yet California is considered to be a high-spending, high-taxing state. Nothing could be further than the truth; rather, California is a very wealthy state where many wealthy individuals and corporations pay little if any taxes.

Rich State, Poor Government
The cause of the state deficit is then clearly not the pensions and benefits of unionized workers. While on paper, the California has a relatively high corporate tax rate, very few large corporations pay anything near the official rate. Due to many tax breaks and loopholes, some of the richest corporations in California pay little or no state taxes. Likewise, many of the richest people in the world live in California, but most only pay a small fraction of the already low state income tax rate. And of course, due to Proposition 13 and the fact that the value of homes are not reassessed, people living in multi-million-dollar homes are often paying only a few thousand dollars in property taxes each year.

What is so shocking is that even with this low tax burden, the one and only plank of the Californian Republican party is a strict stance against any tax increases. In fact, each year, due to the need for tax changes to pass by a two-thirds vote in the state legislature, the Republican minority forces the Democrats to come up with more tax breaks for wealthy individuals and businesses. The end result is that the wealthiest state has one of the poorest governments, and this means that as large multi-national corporations flourish, the vast majority of Californians are forced to pay for the increased costs of education, healthcare, and housing. For instance, each time, the state cuts the University of California’s budget, the world’s greatest public university system simply turns around and increases the tuition for the students.

A Progressive Tax for California
Luckily, all is not doom and gloom in California, and there is a possible solution that could provide a positive example for other states. Since it appears that Governor Jerry Brown will not be able to get any Republicans to agree to his plan to put tax extensions on the ballot in June, he has to change his strategy. His Plan B is to try to get tax initiatives on the ballot for a November election, and to do this, he will most likely need to work with outside groups to collect signatures for a ballot proposition. Since organized labor is the only progressive group large enough to fund a signature collecting campaign, the governor will be forced to work with unions to come up with new tax solutions. This turn of events may mean that out of a fiscal crisis, a real progressive choice could be made.

The unions should only agree to support Governor Brown, if he endorses the following tax solutions:
1. Allow a simple majority of votes in the legislature to pass any new taxes.
2. Increase the top tax rate from 9.3% to 11%. This change would bring in more than $5 billion per year in state revenues, allowing the state to provide desperately needed education, health, and safety services to its population.
3. Close corporate tax loopholes, which according to the California Tax Reform Association would raise an estimated $6 billion per year or more.
4. Tax oil extraction at 9.9% and dedicate the revenue of $1.2 Billion to support higher education.
These four progressive solutions would balance the California budget without resorting to drastic cuts in needed services. Moreover, by fighting for progressive tax solutions, unions could show that they are still a vital force in our political system.

Of course some politicians will state that polls do not support these initiatives, but we need to work together to show the public that these policies are fair and productive. Instead of simply defending against the Right’s assault on unions, public employees, and needed social services, we should promote a positive vision for California and the rest of the nation.

A Letter to the Regents

2011-03-21T09:02:00.000-07:00

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

UC and the State: Sacramento Update

2011-03-10T07:34:00.000-08:00

During the last couple of weeks, I have spent a lot time in the state capital with three goals in mind: reduce the budget cuts for the UC system, block the confirmation of the new regent David Crane, and clarify the state’s obligation to the UC pension plan. After a long talk with Governor Brown, I thought that all of these goals were achievable, but currently, due to the budget stalemate, my optimism has been reduced.

On the positive side, I met with Senator Steinberg’s staff, and I told them that the governor does not support Crane, and it appears that Steinberg also does not want him confirmed. There are then three possibilities: the governor can withdraw the appointment now, Steinberg can call for a confirmation hearing, or we could just wait for a year, do nothing, and have the appointment expire. I think we all agreed that a hearing would be the best path, but no one wants to do anything until after a budget deal is made.

In terms of the pension, the governor has agreed to set up a meeting with union representatives, people from Office of the President, and the governor’s labor people to discuss UCRS. While Brown did not commit to the state contributing to the plan now, he did say he would approach the subject with an open mind. However, we also discussed the possibility of a Republican-sponsored proposition going on the ballot that would limit the yearly pension payout to the social security wage rate, which is currently $106,000. It was unclear if this initiative would apply to UC employees, but my fear is that if the UC gets money from the state for the pension, it would have to play by the state’s rules.

On the final topic of the budget cuts, no one wanted to add any language or make any changes that would stall the very fragile budget negotiations. While many people agreed that the state should protect the core mission of the UC, it looks like the language in the budget will be vague and open to interpretation. Still, I was told by the governor’s finance team that if a budget passes next week, they will start working on the next budget, and we might be able to add some stronger protections then.

You can read my Huffington Post article on Pensions, Unions, and the Media here.

Understanding the UC Budget Part II

2011-03-01T07:27:00.000-08:00

In a response to AFSCME’s suggestions of how to reduce the University of California’s spending, UCOP has written a detailed discussion of the way the UC budget really works. This explanation is instructive because it trots out the usual half-truths, but with many “facts” that are easy to refute.

The Office of the President's first major claim is that reducing funding for athletics or special retirement packages for senior managers will not help the budget situation because state funds do not support either of these expenses. The first part of this argument rests on the idea that self-sustaining units like collegiate sports pay for themselves. However, we know what several of the campuses regularly subsidize their athletic programs; in fact, the Berkeley faculty senate voted last year to stop the practice of shifting millions of dollars a year to the athletic department to cover the internal deficit. We also know that all self-sustaining units use UC buildings that have been built out of state funds and are financed through the shared UC bond rating. Once again, the problem is that the self-sustaining units want everyone else to pay for their losses, while they keep their profits.

In terms of special retirement deals for administrators, we learned from the state audit of UC executive pay that compensation for management comes from multiple sources, including state funds and student fees, and so it is hard to believe that state funds are not supporting special retirement perks. Actually, UCOP does affirm that “management positions are funded out of numerous sources and on average only 28 percent of the savings come from state General Funds.” In other words, close to a third of executive compensation is paid by state general funds.

As I have recently pointed out, all of these budget statistics are suspect because the UC pools its money in several areas. For instance, in a recent Regents investment meeting, we find the following discussion of how the UC invests its operating cash and grant funds on a regular basis: “Mr. Anderson noted that some of the funds would include federal grants and contracts; for example, if the National Science Foundation were to give $500,000 at the beginning of the year to be expended over the course of the year. He cautioned that, in his example, the National Science Foundation would not be pleased if three percent of their grant were lost. Mr. Anderson asked who would be responsible should investment losses occur. Mr. Taylor responded that the campuses would be responsible for any losses.” Here we not only learn that money from grants is regularly pooled with other funds in investment accounts, but more importantly, if losses occur, the campuses have to use their general funds to cover the grants. Moreover, what this discussion does not say is who gets to keep the profits from the investments.

It appears that the general philosophy of the campus is that the self-sustaining units retain their profits, but the general fund has to bail out anyone who loses money. This structure may help to explain Charles Schwartz’s recent investigation into how billions of dollars coming from the state and student tuition for instruction appear to be unaccounted for in UC’s own budget documents.

Like the rest of the country, the poor and the almost poor have to subsidize the wealthy when profits are privatized and risks are socialized. In the case of the UC, the rich medical centers and housing, parking, and dining services declare that because they are non-profit, any of their excess revenue goes back into their own enterprise, or as UCOP explains, there are no reserves because money has to be saved in case “cost estimates are not achieved.”

At the end of the letter, UCOP explains that no state funds go to support the supplemental retirement plans for senior managers, but then he adds that the cost of these programs are subsidized by an “assessment” to each campus. In other words, state funds go to the campuses, and then the campuses are taxed to pay for the special perks to the highest-paid employees, so while state funds are not supposed to pay for supplemental retirement, campuses use state funds to pay for their share of executive compensation.

The only solid rule of the UC budget is that there are no solid rules, and if the rich want to get richer, they will surely find a way.

A UC-AFT Report from Wisconsin

2011-02-22T07:24:00.001-08:00

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.”

Understanding the History and Structure of the UC Budget

2011-02-15T06:47:00.000-08:00

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.

A Growth Model for the UC

2011-02-03T05:41:00.000-08:00

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.

The State of the State: Fighting Budget Cuts One Day at a Time

2011-01-28T09:17:00.001-08:00

For the last several days, I have been in Oakland and Sacramento trying to work out a deal to limit the state budget cuts to the UC system. I testified at the Assembly hearing and met with the Legislative Analyst for Higher Ed and Governor Brown’s point person for the universities. So I will begin with what I know for sure: I know nothing for sure. There is a flurry of activity, and no one knows what Brown is going to end up doing. He is asking for a lot of feedback from a lot of people, but each conversation is framed with the idea that things are going to be bad, and they might get even worse.

While the governor’s initial budget proposal calls for unallocated cuts of $500 million to the UC system, many legislators believe they should make targeted cuts. To help the legislature in this process, I have worked with AFSCME to propose a deal where the state would only reduce the UC by $250 million in exchange for the UC cutting the salaries and perks of the highest compensated administrators. We have also supported the position that there should be no additional fee hikes or enrollment cuts. In fact, I believe I have convinced several key people that the worst thing the UC could do is to cut undergraduate admissions. I have shown that last year, the UC brought in $23,000 per undergraduate in fees and state funds, but only spent $8,000 in direct instructional costs. It would thus be financial suicide to reduce undergrad enrollments since undergraduates subsidize research, graduate education, student services, and administration.

Yes it would be great if we were in a position to advocate for no cuts right now, but there are going to be reductions, and so we should try to make sure that they do not hurt the core mission of the university.

Fighting for Funding and Administrative Reductions

2011-01-19T09:16:00.000-08:00

Next week, I will be going with several union leaders to speak to state legislators regarding the UC budget. We will propose that the state limits Governor Brown’s funding cuts if the UC promises to reduce its administrative costs by $500 million. Our strategy is to help restore funding and to protect vital services without having to resort to furloughs, layoffs, and tuition increases.

Here are the administrative savings AFSCME and UC-AFT will present to state legislators:

1. Eliminate $530 million in Management Inefficiencies.
Since 2004, UC’s management has grown twice as fast as non-management employees. In fact, $1.6 billion in cash compensation went to management in 2009. Thus, adjusting UC’s system-wide management ratio from 7:1 to 10:1 would save over $530 million annually. Also, in addition to cash compensation, UC’s senior managers are compensated through a number of supplemental health, welfare, and retirement benefits. Many of the senior managers who receive these benefits are paid through state funds, causing this benefit to include state funding.

2. Eliminating the Senior Management Supplemental Benefit Program would result in $2.5 million in savings annually. UC puts 5% of about 200 highly paid executives’ annual pay into retirement savings accounts. These funds are available to executives after they retire, in addition to UC’s standard retirement benefits. The cost of this supplemental benefit is about $2.5 million per year. One UC Task Force recommended that this program be eliminated and that “other compensation solutions should be developed and adopted” for senior managers.

3. Eliminating the 415(m) Restoration Plan would save $20 million each year after 2020. This plan mostly benefits long-service, high-income faculty and senior managers by supplementing their annual retirement income with additional income beyond the $195,000 pension limit established by the Internal Revenue Code.

These reductions would be very popular with the public and the legislature, and they could force the administration to change its priorities.

A Plan to Reduce the UC Budget

2011-01-13T06:47:00.000-08:00

Since Gov. Brown is saying that he wants to meet with union and student leaders to discuss how to reduce the UC budget, I have put together a comprehensive proposal to save vital services, while absorbing the latest round of budget cuts:

1. Reduce senior management group by 20%. Just as academic programs are often reduced by a certain percentage, the Office of the President should get the same type of reduction. This process will force the administration to decide who is valuable in their own ranks, and it could save $20 million. If the same process is extended to the campuses, it could save $200 million.

2. Institute a UC tax on all auxiliaries of 10% to go to the general fund; this will bring in $1 billion each year. (Some of this money could be used to fund the pension plan)

3. Reduce the number of grants that do not bring in at least 50% in indirect cost recoveries. The total savings here should be $200 million. The university also plans to bring in another $300 million by renegotiating the federal and state indirect cost rate to match its competitors.

4. Cap administrative salaries, raises, and supplemental retirement perks. This will reduce future costs and help motivate some overpaid administrators to leave. (cost: priceless).

5. Prevent athletic subsidies and force campuses to reduce new construction projects related to athletics. This could save $100 million a year.

While we still need to push for more state funding, these proposals are based on the recognition that the profit centers of the university need to share their extra funds, and we also need a forced reduction of administrative costs.

Brown Asks UC Students and Unions to Help Cut the UC Budget by $500 Million

2011-01-10T14:18:00.000-08:00

The new California governor, Jerry Brown, has just announced a reduction of the UC and CSU budgets by $500 million each for 2011-12, and this time, the cuts will not be replaced by any federal recovery money. While the UC system will probably still show a net increase in revenue, the state cuts will most likely result in another round of layoffs, fee increases, and other austerity measures.

However, there is a big new wrinkle in this process: Brown is asking students and union representatives to help make reductions to the UC budget. Here is the relevant passage from his budget proposal: “A decrease of $500 million in 2011‐12 to reflect necessary funding reductions to help resolve the budget deficit. These reductions are intended to minimize fee and enrollment impacts on students by targeting actions that lower the costs of instruction and administration. The Administration will work with the Office of the President and the Regents, as well as stakeholders (including representatives of students and employees), to determine the specific mix of measures that can best accomplish these objectives.” In other words, for the first time, a governor will try to control the UC budget and attempt to cut unneeded expenses like administrative salaries and athletic subsidies.

Part of this new process was brought on by the attempt of 36 of the highest paid administrators to receive a higher pension. Brown, who has never been a big fan of UC elitism, is going to try to circumvent the university’s autonomous status by tying general funds to specific budget reductions. These moves will also coincide with the state audit of the UC budget, and so we should expect a very defensive posture coming from the Regents and the Office of the President. All stakeholders should start to position themselves to influence this process in a positive way.

The Terminator’s Parting Shot: A New UC Regent

2011-01-04T07:43:00.000-08:00

In one of his last official acts, Gov Schwarzenegger has appointed David Crane to be the next UC regent. While Crane’s appointment has to be confirmed by the state senate, the senate has usually supported regents with a pro forma vote; however, this time things may be different. Although Crane is a Democrat, he has been one of Schwarzenegger’s biggest allies, and he has helped to lead the Terminator’s fight against public pensions and public employee unions. Moreover, Crane’s various investments show that he may have a strong conflict of interest in relation to the university’s own investment portfolio.

As a former Board member of CalSTRS, Crane argued that pensions often hide their true risk by predicting overly rosy investment returns. Crane has also called pensions “non-market” deals, and he has advocated for a new accounting measure that would make pension system’s declare a much higher liability by reducing their expected investment returns. In other words, he wants pensions to publicize a higher liability so governmental officials will have an easy time pushing for pension reform.

It should also be noted that Crane’s link to Schwarzenegger goes back to a very shady deal. According to Capital Weekly, while Crane was at the investment firm Babock & Brown, “Babcock brokered the governor's controversial jet-lease deal with Singapore Airlines, allowing the governor to defer paying taxes on millions in income.” In this nexus of high finance and corporate cronyism, we find the start of a strong relationship.

Once The Terminator was in office, he brought in Crane to help lead the governor’s economic team, and Crane returned Arnold’s earlier favor by engaging in his own questionable deals. According to the L.A. Times, “Babcock & Brown, the financial services firm where Crane worked for a quarter of a century, hired a Sacramento lobbyist last year to influence the governor's office on so-called public-private partnerships, records show. Since joining the governor's team in 2004, Crane has received hundreds of thousands of dollars of income from deals he made while at Babcock, a firm founded in San Francisco and based in Australia, according to financial disclosure reports.” In other words, Crane is a perfect candidate to be a regent because he has already established his credentials of abusing power and using a public institution to enrich himself.

Crane has also been a leader in privatizing public institutions through public-private construction deals. According to Calitics,
“Crane is claiming that he cannot possibly benefit financially from any future deals, but one wonders whether, even if Crane is telling the truth, it really matters. The network of friends and former business associates to which Crane's advice could directly or indirectly steer business is vast. This is how government-by-profit-taking typically works, rewarding friends and punishing enemies. Whether or not Crane gets his profit now, as an economic adviser, or later, when he returns to Babcock & Brown or some other destination, is in many ways besides the point, just a clever way to avoid violating the letter of the law.” Yes, like so many other regents that have come before him, Crane is set up to profit from his appointment as regent.

Luckily, there is already a movement coming out of a UCSB faculty group to block Crane’s appointment, and as the year progresses, we hope to organize the first senate rejection of a UC regent. It is time to end the attack on pensions, public employees, unions, and our state’s institutions, and opposing Crane’s nomination would be a first step in the stand against free market fundamentalism or what is otherwise know as crony capitalism.

UC Execs Reveal True Values

2010-12-31T09:56:00.000-08:00

The recent revelation that 36 UC execs have called on President Yudof to “do the right thing” and allow their pensions to go beyond the IRS income limit shows in bright strokes how the university has taken on the logic of a Wall Street firm. Not only does the upper management seek to reduce labor costs by lowering benefits, reducing salaries, busting unions, and eliminating positions, but there is an insatiable hunger to transfer wealth and power to the top. Moreover, many of the people who signed the letter asking for increased pensions are directly responsible for the management of the UC’s investments, which lost over $23 billion in 2008-09. Like Wall Street investors, the people who helped steer the economy into a ditch now want record-breaking compensation deals.

On one level, I actually feel for President Yudof, who allowed these high earners to escape from their furloughs only to have them turn on him. In fact, it is important to stress that one reason why we have not seen the needed faster ramp-up of the employer contributions to the pension plan is that the medical centers, with their billions in net profit, have argued that they cannot afford to contribute the needed amount. The leaders of the “self-sustaining units” feel that the only way they can stay highly ranked is if they offer huge compensation packages to their star administrators and researchers. Like the self-promoting, self-compensating Dean of the UCLA Anderson Business School, these top earners are pushing to further privatize the UC so that they can generate new compensation schemes.

Of course all of this is occurring during a time when the new governor is threatening to reduce the UC budget, and the university is bracing for the results of a state audit that will surely spread gas on the fire. The only responsible thing for the UC administration to do is to show that it will spend state funds and student fees in a fair and effective manner. By freezing student fees, increasing instructional budgets, and reducing the size and costs of administration, the UC system will be in a much better position to protect state funding and its public image.

Rating the Raters: The LA Times Tries to Defend the UC System

2010-12-21T07:35:00.000-08:00

In its December 17th Editorial on the UC system, the LA Times unintentionally highlighted in one paragraph much of what is wrong with our higher education system: “Colleges and universities across the nation, prompted by ubiquitous rankings based on factors that often have nothing to do with the quality of education, have been engaging in an academic arms race for top managers and star professors, who command big salaries. It's a race that has gone to extremes, and California could indeed choose to drop out of it. But it would do so at a tremendous cost.” In other words, a ranking system, which has little to do with educational quality, is driving the priorities and practices of universities, but since everyone is conforming to this misguided system, the University of California must do the same. Moreover, ranking guides like the U.S. News & World Report Annual College Guide motivate schools to pour money into high-ranking star professors and administrators.

What this editorial does not say is why schools need to compete in the star system in order to achieve the highest rankings. One possible response is that a large part of a school’s rating relies on its perceived reputation by other comparable institutions, and these schools often base their assessment on how a university pays its stars. However, a better explanation is that since universities and colleges are not ranked according to any real assessment of educational quality, there is no incentive for these institutions to put money into instruction, and so they push funds into expensive research and administration.

As I argue in my forthcoming book The Tuition Trap: Why Costs Go Up and Quality Goes Down at American Universities, the lack of any shared assessment criteria in higher ed simply allows schools to spend money on anything they want to pursue, and this usually means that schools use tuition dollars and state funds to support high compensation packages for its stars. After all, since universities are able to get away with substandard education, they can use money intended for educational activities to promote non-educational priorities.

The problem then is that a lack of educational quality control results in increased costs and a further diminishment of quality, and in a system of incremental budgeting, schools will simply spend as much money as they can get. It is also important to stress that since the only thing that controls the spending habits of schools is a lack of funds, universities spend a great sum of money trying to raise dollars from multiple revenue streams. The only solution to this problem is for schools to be ranked in part according to how well they teach their students, but this would require some type of shared assessment, and so far, schools have resisted any standardized testing.

While universities should not be ranked on how well their students do on standardized tests, there does have to be some shared way of judging the quality of instruction. After all, universities and colleges spend a great deal of time assessing students and faculty, and so they need to share and compare this data. However, until some other source replaces the U.S. News & World Report’s ranking system as the central method parents and students use to compare schools, there will be no way of motivating schools to concentrate on educational quality, and without a concentration on quality, there can be no way of bringing down costs. As paradoxical as it sounds, the best way to contain cost creep is to have high standards and a transparent way of judging quality.

Regents Rubber Stamp Fake Future

2010-12-14T09:03:00.000-08:00

At a special meeting on December 13th, the UC regents voted to endorse the Commission on the Future’s final report and the new pension plan. Before the actual vote on the Commission’s report, there was a long discussion of what they were actually being asked to vote on. Some of the regents weren’t sure if they were voting to endorse the whole report, part of the report, or none of the report. Part of the confusion stems from the fact that the final report doesn’t actually make any specific changes; rather, the report discusses general principles with mostly vague goals. Basically, the report argues that the UC system needs to educate more students with less money from the state; the major way the university plans to do more with less is by increasing the number of high-paying out-of-state students and transfer students, while finding ways to speed all students through the system, perhaps with the use of online courses or reduced course requirements.

As I pointed out in my public comments, the proposed solutions make neither fiscal nor educational sense. For instance, we find the following statement in the final report: “admittedly, the education of upper-division students is more expensive because of smaller classes and necessary specialization and facilities . . . From an aggregate perspective, however, transfer students require only two years of UC resources in order to graduate with a UC bachelor’s degree. . . Serving transfer students increases the number of degrees the UC can confer with any given level of instructional resources.” According to this contradictory logic, upper-upper division courses are more expensive, and therefore the way to save money is to increase the number of expensive classes and reduce the number of inexpensive ones.

This failure to grasp basic math and accounting is continued in the discussion of why they should increase the number of graduate students in relation to undergraduate students: “the education of graduate students is more expensive than undergraduate students, both in instructional costs and student financial support. Therefore, under current and baseline fiscal projections, funding for graduate enrollment growth would require that campuses reduce undergraduate enrollment — an unacceptable result in light of our access mission and commitment to the master Plan enrollment goals.” After clearly stating that graduate education is more expensive than undergraduate education, and that the increase in graduate students would result in an unacceptable decrease in undergraduates, we find the following argument: “Recognizing UC’s role in the master Plan as the state’s primary research and doctoral-granting institution, the commission recommends that the University increase the proportion of graduate enrollments from 22 percent of total enrollments to 26 percent by 2020-21, with individual targets set by each campus.” So the master plan tells us to have more undergraduate students, but the matser plan also tells us to have more doctoral students, so the solution is to do both even though the university cannot afford either.

As I have argued, the university simply refuses to admit that undergraduates are now subsidizing everything else in the UC system, and the only solution the university finds to any problem is to increase student tuition and to cheapen the quality of undergraduate education by turning to online classes, reduced requirements, summer courses, and fast degrees. In the Commission’s words, “the master Plan prescribes a ratio of 60:40 in upper division to lower division undergraduate students in order to have ample upper division spaces for community college transfer students (Uc’s ratio in 2009-10 was 66:34 due to freshmen entering with advanced placement and other college credit). Given these expected capital facility costs, UC will either need to find significant new revenues to supplement limited state funding or it will need to pursue alternatives to bricks-and-mortar classrooms and labs.” In the hands of this collection of amateur educationalists, the master plan is simply a rhetorical weapon to whip out to score points when needed. Not only does the final report lack vision, but it starts with all of the wrong premises.

In a moment of frustration, President Yudof declared that if someone else has a different plan, he would love to see it. But a coalition of unions has presented multiple plans to Yudof, and they have been simply ignored. One thing is clear, the regents will not be able to maintain the fiscal health and educational quality of the university if they cannot do simple math, and if they spend the majority of the time blaming the state for all of the UC’s problems, nothing will ever change.

Finally, on the pension front, several unions argued during public comment that retiree healthcare should be based on pay bands like all other current healthcare premiums. While this proposal was rejected by the regents, they did respond to a last minute plea by the highest-paid employees to re-consider waiving the IRS limit on pensions. In an incredible act of hubris, during the meeting, they re-wrote the final pension proposal, and it was unclear if the regents even knew which proposal was under consideration.

UCLA Embraces Growth, but there is a Catch

2010-12-08T08:54:00.000-08:00

In an Inside Higher Ed article, I argued that the way out of the current financial problems facing American universities is to increase undergraduate enrollments. I made this argument because not only do we need more college graduates to fuel our economy, but high university enrollments decrease the ranks of the unemployed and help to train people for the new economy. Moreover, I have shown how undergraduate students generate huge profits for universities, and this revenue can be used to support research, graduate education, and community service. I have also exposed how research grants and endowment gifts often end up costing universities more money than these unstable external sources of funding collect. Finally, I have stresses how the profit-making units usually refuse to share their revenue and often survive through hidden subsidies.

Given this stress on the need to increase undergraduate enrollments, I should applaud UCLA’s decision to bring in an additional 2,500 nonresident undergraduate students in the next few years; however, the campus’ plan poses several problems. The first issue is that while the school expects to rake in $55 million in new tuition revenue, it does not have any stated plans to spend more funds on instruction and student services. In fact, senior administrators have argued that since the undergraduate College already has an $80 million deficit, all of the additional income will be used to help balance the budget. In other words, there will be more students, but no additional resources, and this comes during a time when the size of the teaching faculty has already been reduced.

Another complicating factor is that UCLA intends to concentrate on bringing in new students from China and India because these students pay full tuition and receive no financial aid. Once again, we have to ask how these students will succeed if the campus does not increase the number of ESL classes and other needed student services. Also, there still remains the sticky problem of how will students be able to graduate in a timely fashion if UCLA brings in many more students but has fewer classes and fewer teachers. It appears that these potential international students are seen as a source of needed income, but steps are not being taken to make sure they receive a high quality educational experience. In the next few months, we will be pushing the administration to make sure that added revenue from student tuition finds its way into the classroom.

UCLA’s Neoliberal Path

2010-11-29T06:48:00.000-08:00

Neoliberalism is centered on the belief that free markets can regulate themselves, and so it is unnecessary to have large government programs and the taxes needed to support public education, universal healthcare, and environmental standards. Moreover, neoliberal institutions like the IMF and the World Bank believe that the best way to help a developing country is to impose austerity measures and replace the public sector with private businesses. In the case of universities, the neoliberal formula involves weaning oneself from public finances by increasing tuition, cutting unprofitable programs, and increasing the number of “self-sustaining” units. Of course, this strategy often fails in the end because it turns out that the privatized self-sustaining areas rely on public subsidies in order to remain solvent.

To see this neoliberal agenda in action, we can look at the recently announced plan to restructure UCLA. As Chancellor Gene Block has argued, the only way that the campus can overcome unstable state funding is if it reduces academic costs, increases nonresident enrollment, secures more philanthropic donations, offers more self-supporting degree programs, and expands intellectual property. Looking at each one of these five elements, we will see that not only do they represent the privatization of a public institution, but they are all destined to contribute to a reduction of financial health for the institution.

Restructuring Majors
In the case of reducing academic costs, the strategy relies on lowering the number of requirements in each major. Two of the results of this tactic called “challenge 45” is that the size of upper-division courses has increased and students have been forced to scramble to find courses outside of their majors in order to graduate on time. Moreover, one strategy to help reduce the demand for high enrollment classes is a new expanded summer program that motivates students to pay extra for classes they need. It is important to note that these summer classes are squeezed into a time period that is half the length of a regular quarter session and a third of the time of a semester course. In short, students are being told to pay more for less.

Not only are students having to pay extra to attend during the summer, but the university is also considering allowing students the option of taking an “e-section” of a high-demand course. According to a Daily Bruin article, “The students will receive lecture instruction online via Bruincast and attend a live discussion once a week.” Once again, students will be asked to accept an inferior mode of education in order to move through the system in an efficient manner, and there appears to be little attempt here to monitor the value of the educational experience or the role of faculty in determining how courses are delivered.

While the goal of these instructional changes is clearly to save money, the people putting this together admit that they have no idea how much funds these new programs will save. According to Robert Cox, manager for institutional research in the UCLA Office of Analysis and Information Management: “Everyone can agree that there are ways in which these things can lead to savings, but no one has put a ticket on it to show how much you can save . . . At the policy level, you can see where the policy would tend to take the result, but figuring out how it can fill the hole in the budget, you can’t do it; the issues are too complex.” This analysis does not make one feel very confident about the ability of UCLA to predict and manage its own budget.

Globalizing Enrollments
If we now look at the second part of the UCLA plan, the increase in nonresident students, we do see a source for revenue, but once again, this strategy does not address several academic and financial issues. For instance, someone has to ask how much money is UCLA spending on trying to recruit international students. While the cost is never discussed, we have learned from a Daily Bruin article that one way that the campus plans to double its nonresident student population is by changing the way it markets itself to the outside world, and the goals for this program are quite ambitious: “Boosting the nonresident population to about 5,000 will mean adding about 10,000 more seats to classes. It will mean more students seeking appointments in the Ashe Center at the height of flu season, more students in need of counseling or psychological services and more students in need of on-campus housing.” While I have argued that public universities like UCLA should expand enrollments in order to reduce the need for tuition increases, I have also argued that schools have to hire more faculty members and make sure that the new funds are directed towards undergraduates; however, so far at UCLA, we have seen a reduction of people teaching undergraduate courses, and so it is unclear who will teach the additional students.

In fact, UCLA now only has three lecturers who teach English as a Second Language (ESL), and yet, we are expected to accommodate a growing number of international students who need language help in order to succeed in their courses. Ironically, the ESL lecturers are currently supposed to be self-sustaining because they need to raise money through summer courses in order to support the classes they teach during the year. This unsustainable situation is yet another example of how the myth of self-sustaining units never really holds true.

Hoping on Gifts
While UCLA attempts to reduce instructional costs and increase the number of international students at the same time, it also wants to increase its endowment by having UCLA students call former students and ask for increased giving. It should be pointed out that UCLA is already the most successful public university in the country when it comes to private giving, and it thus unclear how it will be able to increase its revenue during these difficult financial times. Also, 95% of the UCLA gifts can only be used for very specific purposes, like endowed chairs and new buildings, and so they rarely contribute to the general fund of the campus. In fact, many gifts end up losing money because they do not pay for the full cost of the programs they seed and support.

While the people in charge of the endowment campaign stress that they want to convince alumni to give more because of the great value of a UCLA education, many of the current proposals to reshape the university threaten to undermine both its quality and reputation. For example, the move to enhance the number of self-sustaining units includes a major expansion in extension programs, which are often taught by non-UCLA faculty and cater to non-UCLA students. Moreover, these programs are being pitched as ways of training students to fulfill present corporate needs: “Programs would be offered according to what employers want in new hires, among other factors.” Perhaps these extension programs will bring in some more funds, but we have to ask if the university wants to define itself by what some outside company thinks it currently needs.

Privatizing the Public
Of course, UCLA is already leading the way to privatization by catering to the Anderson Business School's desire to leave behind state funding and move to a self-sufficient funding model. Although, the UCLA faculty senate has voted against this move, it is clear that the leaders of the business school are going ahead with their plans, and it appears that Chancellor Block supports this change, which will not only require increasing tuition to over $55,000 but could also result in the general UCLA campus losing needed state funding. It is also unclear what the school will do when pension costs increases dramatically in the near future.

Intellectual Property Values
Perhaps the university is hoping that cashing in on intellectual property rights will help UCLA to resolve the difficult task of increasing revenue while decreasing costs, yet, it should be stressed that it has been very difficult for schools to profit from their inventions and knowledge production. It turns out that it is very costly to do research, and many research projects never go to market. In other words, universities keep on looking outside of the classroom to find a source of income, but the fact of the matter is that education is not only what schools are supposed to do, but it is also what they do best and most cost-efficiently. This is not to say that universities should not continue to pursue ground-breaking research, but they should realize where their money comes from and how much it costs to fund expensive labs with high-tech equipment and an army of bureaucrats, lawyers, office managers, and graduate students. Currently, undergraduate students subsidize virtually everything universities do, and it is time for schools to recognize this by making sure that vital undergraduate programs are supported.

The Regents Take a Strong Stance Against Free Speech and Shared Governance

2010-11-22T07:01:00.001-08:00

Before the UC Regents voted on another fee increase, several of them voiced their concern for the future. One Regent bemoaned the role of shared governance in blocking some of President Yudof’s efforts to save money. After arguing that the committee structure on the campuses should be “zero funded” and scrapped, Regent Island affirmed that the faculty are holding up cost-saving measures like moving classes online. He stated that due to the faculty’s resistance to change, the online initiative would be so watered-down that it would fail to generate significant revenue.

After this discouraging attack on shared governance, I received word that a police officer pulled a gun on a crowd of protesters. After reviewing the video, I asked during public comment for a full investigation of this incident, which came very close to being a new Kent State tragedy. As I have discussed with campus police in the past, they need to do a better job at preparing for protests and making sure that they only use force as a last resort. Posting a single officer at a sensitive point makes no sense and ends up putting police and the protesters at risk. Moreover, the use of a single row of bicycle racks to hold off hundreds of angry people is a poor defense and opens the door for unneeded police over-reaction.

The general hostile climate against free speech was extended inside and outside of the Regents meeting. Before the start of the meeting on Wednesday, I was told that only people on a special list would be able to enter into the meeting. When I pointed out to a campus police officer that this goes against California’s open meeting law, I was told to back off. In order to make sure that anyone from the public could line up to enter the meeting, I had to contact a staff person from the Board of Regents office who informed the officers to let the public enter the meeting.

While I do feel that the police were often put in harm’s way due to bad planning, there is no excuse for detaining and arresting people for chalking messages, and the police should not be able to simply tear down the signs of protesters. Furthermore, the use of pepper spray at the meeting appeared to be indiscriminate and counter-productive. In general, some police officers displayed a hostile and defensive attitude towards the protesters and the general public.

Since no actions have been taken to discipline the campus police who used tasers on students last year at UCLA, I believe that it necessary for us to investigate filing suit against the university for creating an environment that is hostile to free speech. If we do not counter the aggressive actions of the campus police, we will lose our ability to defend the public nature of our university.

The UC's Path to Financial Suicide

2010-11-15T06:47:00.000-08:00

Due to three actions taken by the Regents, the University of California is headed towards a total financial meltdown. These three actions are the nearly twenty-year contribution “holiday” for the pension plan, the outsourcing of the management of the investment funds, and the pending decision to support President Yudof’s pension solution. While many people have been involved in these moves, the Regents are responsible for the fiscal health of the system.

The Problem
The Post-Employment Task Force and President Yudof have both endorsed a funding plan for the pension that will require the university to eventually spend at least $1.7 billion a year on pension costs alone. This level of employer contributions dwarfs any cut the UC system has received from the state. We must remember that when the state cut the UC budget by $670 million in 2008-10, the university turned to layoffs, furloughs, huge fee increases, enrollment reductions, and a whole host of cost cutting measures that shook the university at its foundation. Imagine if the university has to spend close to $2 billion several years in a row.

The fact that no one has questioned this path to financial suicide just means that either no one understands how the university is financed or no one wants to deal with the real problem. Instead, we get Yudof's pension proposal for saving money in thirty years by changing the retirement age for new hires. This impotent gesture may placate the bond raters and some Republican legislators, but it does not address the central problem, which is that we need to move to fully funding the normal cost of the pension program now.

The Union Coalition Criticism of the New Pension Tier
The Union Coalition (UCUC) is protesting Yudof’s plan since: 1) the new tier will hurt many staff and manual workers who will not be able to work until 65; 2) the new tier and current contribution rates have to be accepted by the unions, but the university for the most part has ignored the input of the unions representing close to half of all UC employees; 3) the new tier does not help to deal with the current problems facing UCRP; 4) the ratio of employer-to-employee contributions for the new tier is much higher than any past ratio (the ratio in the 1980s averaged 5:1, and the new ratio is almost 1:1); 5) the large pension contributions combined with the shifting of costs for retiree healthcare puts most employee groups below market value; and 6) there is no stated plan to address the decrease in total compensation.

While the unions are willing to work with the university to help fund the pension in a more effective manner, the university has refused to include the unions in the decision-making process. In fact, when the union coalition asked President Yudof to allow us to make a presentation about our concerns during the official discussion of his pension proposals at the November 18th Regents meeting, we were told that the Regents cannot have every outside group take up the time of the meetings, and so we can have our one minute during public comment time. Our response is that we represent close to half of the employees, and we are not just some outside group. Furthermore, at the start of public comments, we are always told that the Regents will not be responding to any questions posed by the speakers; this is a great example of fake democracy in action.

An Impossible Funding Plan
Instead of acknowledging and correcting all of the mistakes that the Regents have made in relation to UCRP, President Yudof gives this summary of why the pension plan is in trouble: “Costs are increasing, UC and its employees are facing increasing contribution levels, and the state has not resumed its funding to be applied to the University's pension fund.” There is no mention here of losing $16 billion in investments or the Regents’ decision to suspend contributions for 20 years; instead the blame is placed squarely on cost increases and the failure of the state to support the university. When Yudof does get to the plan to fund UCRP, this is what we are told: “Under the current Plan, total contributions to UCRP are on track to increase to above 30 percent of covered compensation in 10 years, by fiscal year (FY) 2020 . . . University contributions are assumed to be 7 percent in Plan Years beginning FY 2011 and 10 percent in FY 2012, with a two percent increase annually thereafter.” In plain English, this means that if employee contributions peek at 8% of their salary in 2013, and the university pays 12% of covered compensation in 2013, the employer contribution will move to 22% by 2018 (after 2012, the employer contribution rate increases 2% each year). However, it is highly unlikely that the university will be able to require all grants, medical services, and core functions to pay 22% of salary in 2018, and so we are left asking, why didn’t the university simply bite the bullet and move immediately by requiring the employees to pay 5% and the employers 12% to fund the full normal cost and therefore reduce the need to pay so much in the future. Moreover, if the university intends to borrow money from itself to pay down the liability, it could do this right away if it fully funded the normal cost with higher contribution rates.

The reason why the university did not want to move to full funding of the normal cost right off the bat is that it knew that it could not get the medical centers and the research grants to pay their full share, and it was afraid of letting the state off the hook for its part. However, by not putting in 12% from all sources now, it will have to put in at least 22% later. Meanwhile, the grants and the medical services are not paying their fair share, and the administration is alienating the unions who represent close to half of all of the employees in the pension plan. Instead of working with the unions to move to full funding, the administration has removed most represented employees from the process and has pushed for a new pension tier that is supposed to save $8.4 billion over a 25-year period, which turns out to be $336 million a year. However, the university has also promised faculty and unrepresented staff that these savings will go to pay for salary increases to cover increased employee contributions and benefit reductions. In other words, the new tier will save nothing and do nothing to solve the immediate problem.

The way that Yudof’s proposal attempts to address the current funding of UCRP is through borrowing and debt restructuring: “Based on the suggestions of the Finance Team, the President recommends that The Regents delegate authority to the President to fully fund the UCRP ARC as quickly as practical by paying UCRP “modified” ARC (Normal Cost plus interest only on the UAAL) from 2011 until 2018 and using other University resources to make up the gap between Normal Cost and modified ARC, including borrowing from the Short Term Investment Pool (STIP) and restructuring of University debt using STIP interest.” This policy is full of loopholes because it calls to fully fund the normal cost “as quickly as practical,” which is legalese for “whenever we want to do it.” Furthermore, the idea of funding UCRP by “using other University resources” means that the President will be given the power to raid any part of the university including student fees and departmental budgets.

Why We All Should be Concerned
If you are not worried about the university having to come up with 22% of covered compensation to fund UCRP, imagine if your department or program would have to take a 22% reduction in its budget every year. Just as departments are assessed a 3% tax to fund retiree healthcare, it is likely that each department will be taxed 20% for UCRP each year. In fact, UCLA has already moved to a decentralized budget system that forces individual departments to pay for all benefit costs.

The only solution is to bring all of the stakeholders to the table, including the unions, and figure out a rational and doable plan to fund the pension and maintain the university without increasing student fees at a high rate or closing down departments or even campuses. By ramping up employee and employer contributions now and eliminating any new tier, the university can put itself on a more stable financial ground, but it will take the agreement of all parties. Furthermore, the Regents have to be held accountable for their failure to protect the financial interests of the university.

UC-AFT Election Analysis

2010-11-03T06:55:00.000-07:00

The most positive aspect of the 2010 election is that Meg Whitman did not win and proposition 25 passed, which means that a simple majority of the state legislature can now pass a budget. In the past, we have had a good relationship with Jerry Brown, and he will most likely support higher education in a more robust way.

Another great win was Das Williams for state assembly out of Santa Barbara. Das has been a big supporter of the students and the faculty at UCSB. In fact, UC-AFT was an early promoter of his candidacy, and we hope to work with him closely in shaping his educational policies.

On the national front, things look pretty bad, and we should expect a period of profound infighting and a budgetary stalemate. It looks like the country is following California’s recent past because the minority party will be able to block all legislation and call for tax cuts and the de-funding of public programs. In terms of higher education, we should expect a move to cut student loans and grants. It is also likely that the House will try to reduce the funding of health and science research. President Obama will either compromise and adopt a conservative agenda, or he will promote a more progressive agenda and let the Republicans vote down popular programs. Let’s hope he picks the latter.

A Response to the Commission on the Future’s Final Recommendations

2010-10-25T07:33:00.000-07:00

Since the regents are supposed to be discussing the Commission on the Future’s recommendations at their November 16-18 meeting, it is important to look at their final report. Following the trend of most recent UC documents, the Commission begins by claiming a dire fiscal crisis: “state funding has not kept pace with inflation and enrollment growth, particularly over the last decade. Since 1990-91, average inflation-adjusted state support for educating UC students declined 54 percent. Student fee increases have addressed only about two-fifths (40%) of this decrease. Other actions to reduce costs have resulted in reduction in staff and instructional offerings, faculty and staff salary lags and reductions in funding for instructional equipment, library materials, and facilities maintenance.” As I have argued before, these statistics are misleading because they neglect to add that since 1990, UC has reduced its instructional costs by increasing the size of classes and relying on inexpensive non-tenured faculty to teach the majority of the courses. Moreover, while the report claims that UC now only gets $7,570 per student from the state, the real figure is closer to $10,000, and on some campuses, the amount goes up to $18,000. In fact, according to the Commission’s own numbers, in 2009-10, there were 214,000 resident students, and since the university got over $2.5 billion in funding from the state, the average student subsidy was $11,687.

Processing Students at a Faster Rate
Since the university claims that it is not getting enough money from the state, and it cannot support increased enrollments, the only thing that can be done is to do more with less. In fact, many of the commission’s recommendations are shaped by this logic, which is itself based on a false understanding of how the university actually spends its money. For example, Recommendation 1, Adopt Strategies for Reducing Time to Degree, argues that the university can save money by pushing undergraduate students through the system at a faster rate: “Implementing formal programs that encourage and facilitate a shorter time to degree, such as “packaged” options for three-year degrees with pathways that make full use of advanced placement credits and summer terms. Such pathways could include joint bachelor’s/master’s degree programs.” While three-year degrees would lower the quality of a UC degree, they would do nothing to improve the fiscal health of the system.

Not only does the Commission want to decrease the time it takes to get a degree, but it also wants to increase the number of transfer students and reduce the number of traditional freshman enrollments. Recommendation 4: Reaffirm the University’s Commitment to Achieving Master Plan Targets for Freshman and Transfer Students looks a good idea on the surface, but it does not take into account the economic realities of accepting more transfer students. By calling for a 60:40 ratio between upper- and lower-division students, the university will cut into its profit margin generated by large enrollment, low-cost, lower-division courses.

Due to the way courses are currently structured in the UC system, lower-division undergraduate courses produce a profit, while upper-division classes break even, and graduate education loses money. This economic analysis is not meant to undermine graduate education, but it is essential for us to recognize that we need to honestly see where money comes in and where it goes. Once we know how we gain and spend money, we can determine how to support the programs we want to protect. In fact, the final report does at one point recognize this funding structure, “Admittedly, the education of upper-division students is more expensive because of smaller classes and necessary specialization and facilities. As implemented, the resource consequences must be monitored. From an aggregate perspective, however, transfer students require only two years of UC resources in order to graduate with a UC bachelor’s degree. Serving transfer students increases the number of degrees the UC can confer with any given level of instructional resources.” While the first part of this argument acknowledges the financial need for more lower-division courses, the final part ignores this financial reality and simply returns to the desire to increase degrees by increasing transfer enrollments.

In fact, by calling for a 60:40 ratio between upper- and lower-division students, the university will commit economic suicide. Not only are upper-division students more expensive, but transfer students limit the ability of the university to accept out-of-state students who pay a high tuition without financial aid.

The Online Solution
Another result of the commission’s failure to grasp that undergraduate students subsidize the rest of the university is their call for online classes. The very title of Recommendation 5, “Continue Timely Exploration of Fully Online Instruction for Undergraduates, as well as for Self-Supporting Programs and in University Extension” makes one think that self-supporting programs actually provide needed dollars to the general fund. Moreover, the commission makes the following dubious claim: “Within the general realm of our current on-campus programs, and in the near-to- mid term, increased online instruction may . . . reduce course impaction, reduce scheduling conflicts, and increase summer session enrollments by enabling students to earn credits without being on campus, thus reducing students’ average time to degree.” What this analysis does not state is that online courses are likely to cost more money, decrease the quality of UC courses, require more faculty work, and draw funding away from the core mission.

While there are some words of caution in the Commission’s discussion of online courses, the final report calls for a major extension of digital education: “The Commission believes that the Pilot Project currently being coordinated by the Office of the President, with the endorsement and participation of the Senate, may clarify the desirability of substantially increasing the use of fully online instruction for degree credit, beginning with lower division and UC Extension courses.” Once again, the problem is that if the UC farms out its lower-division courses, departments might lose one of their central sources for funding.

External Grants and Endowments Lose Money
One positive part of the final report is the acknowledgement that external research grants cost the university several hundred million dollars a year: “Externally funded research in the University of California is supposed to be conducted under the accounting principle of total cost recovery, including indirect costs. The indirect costs are intended to recover the facilities and administrative costs attributable to research. However, Indirect Cost Recovery (ICR) rates on federally funded research at UC campuses do not fully recover the costs of research, falling 5-10 percentage points behind some of our comparator institutions and on average 25 percent short of full recovery. For a variety of historical reasons and local campus practices, UC also does not fully recover the costs of research for non-federally funded research projects – those projects funded by the State of California, foundations, gifts, and corporations.” It turns out that while most people think external grants and endowment gifts bring money to universities, these external funds can actually cost schools large sums because they fail to cover the indirect costs associated with buildings, benefits, labs, staff, administration, and equipment.

The Costly Problem of Graduate Education
If we acknowledge that external funding can actually hurt the financial health of an institution, we realize that the only real source of income for the university is undergraduate tuition and related state funding. Yet, Recommendation 12 calls for, “Increase Graduate Student Enrollment to Meet Long Range Planning Goals and Research Mission Prescribed in the Master Plan.” Although the UC system needs to continue to support graduate education, it is unclear how this can be accomplished. For example, the Commission recommends a shift in the ratio between graduate and undergraduate enrollments: “To be excellent in national and global terms, however, the proportion of graduate enrollments relative to undergraduate enrollment must be adequate to support the research and instructional mission.” It is unclear whether this statement means that the university needs graduate students to teach undergraduates, or the university needs to increase graduate students to retain its prestige and to support the research mission.

What is clear is that a change in the ratio of graduate-to-undergraduate students would require either an abandonment of the Master Plan or a new funding model: “The education of graduate students is more expensive than undergraduate students, both in instructional costs and student financial support. Therefore, under current and the baseline fiscal projections, funding for graduate enrollment growth would require that campuses reduce undergraduate enrollment—an unacceptable result in light of our access mission and commitment to the Master Plan enrollment goals.” Given this awareness of the high cost of graduate education, it becomes hard to rationalize the following recommendation of the Commission: “Recognizing UC’s role in the Master Plan as the state’s primary research and doctoral-granting institution, the Commission recommends that the University increase the proportion of graduate enrollments from 22 percent of total enrollments to 26 percent by 2020-21, with individual targets set by each campus.” From a strictly budgetary perspective, it makes no sense to replace the profit-generating undergraduate students with costly graduate programs. In fact, due to the often low levels of support for graduate students in the UC system, it would be much more cost effective and fair if the university reduced the number of graduate students and increased their funding.

The Failure to Grasp the Budget as a Whole
It should be clear at this point that the Commission’s recommendations do not fit together and suffer from an integrated understanding of how money flows in the UC system. In fact, even the good suggestion of reducing administrative costs is undermined by the methods for achieving the savings. While recommendation 14 calls for the system to, “Expedite Implementation of UC’s Initiative on System-Wide Administrative Reforms, with the Goal of $500 Million in Annual,” the way the reductions are being resented represent a major increase in power for the Office of the President. In fact, after a period of reducing the UCOP budget by farming positions out to the campus, we are now witnessing a major increase in UCOP positions.

Since no one is looking at how the different parts of the university budget interact, many of the proposed ways of saving money will actually cost the university funds in the long run. For example, the call to derive $250 million from self-supporting programs, like extension, fails to recognize how these programs often turn a profit by not paying their fair share for buildings, administration, staff, benefits, and maintenance. In other words, self-sustaining units are not actually self-sustaining, and they rely on using UC facilities and faculty even though they claim to be separate and private. Moreover, as the report posits, most of the profits of these self-sustaining units come from one source: “Current UC self-supporting programs generate about $100 million annually, about $25 million per year above program costs. However, most of that revenue comes from the high- cost, self-supporting executive MBA programs. To date, most other self-supporting programs are relatively small and generate modest amounts above programs costs.” Unless, we want to shut down most of the privatized programs and increase the production of executive MBAs, we will need to find another source for revenue.

Even Private Gifts Lose Money
Another proposed area for future revenue is private fundraising, but as recommendation 16 notes, the way these funds are donated often restricts their use and prevents them from contributing to the common good: “The University’s history of fundraising, however, is marked by a high level of restriction on the funds raised. Approximately 95 percent of UC’s overall endowment payout is restricted, contrasted with 80 percent for most public institutions and 55 percent for private institutions. Only two percent of all gift support in recent years is unrestricted, even less for endowment. To put this in context, of the $1.3 billion in funds raised in FY 2008-09, just over $25 million could be characterized as unrestricted.” Not only are most of these endowment funds dedicated to specific projects, but they often fail to cover the full costs of the programs and positions they support. Furthermore, the university spends huge sums of money trying to raise more endowment funds.

When All Else Fails, Raise Tuition
The final recommendation calls for exploring differential tuition by campus, and it is clear from the Commission’s final report that they see this as a very attractive proposition: “Although tuition cannot singlehandedly solve UC’s budgetary challenges, it is a key component of any funding strategy and one of the only revenue sources that UC can effect to replace other funding shortfalls. There still exists substantial headroom on each campus for across-the-board tuition increases without impacting enrollments.” In other words, campuses can raise tuition and still attract high enrollments, and so each campus should be able to set their own price. Of course, this recommendation completely negates the previous defense of the Master Plan and the very essence of a public university.

The Real Recommendations
At the end of this mixed bag of recommendations, the Commission adds a curious section under the heading of “Contingency Recommendations”: “In addition to the recommendations endorsed, the Commission also deliberated several ideas that are worthy of additional study but need not be advanced at this time. Should the fiscal crisis deepen and state and other funding sources continue to decline to a point where the University can no longer sustain its longstanding commitment to academic quality and increasing access, The Regents, President, Chancellors, and Academic Senate may need to consider some or all of the following contingency measures.” By starting with the rhetoric of crisis, the Commission opens the door to a whole host of problematic suggestions: “Curtail student enrollment, potentially falling short of achieving the Master Plan ratios recommended by the Commission (see Recommendation 4) and restricting access at both the undergraduate (freshmen and transfers) and graduate levels: Re-examine UC’s financial aid strategies, also recommended by the Commission (see Recommendation 6), including reducing the portion of new undergraduate tuition revenue that is set aside (currently 33%) to fund financial aid for needy students; Raise or eliminate the systemwide limit on the proportion of nonresident undergraduate students admitted and enrolled (the Commission recommends a 10 percent systemwide cap in Recommendation 7): Substantially increase tuition and fees, including charging differential tuition by campus (see Recommendation 17), as part of a broad based program to sustain the University; Downsize the University’s faculty and staff workforce, including limiting the replacement of faculty lost due to retirements, terminations, and other separations. This recommendation came to the Commission from the Academic Council: Forego new building and capital projects that are not absolutely essential for safety. “

I believe that these final suggestions actually represent the real recommendations of the Commission. In this neoliberal vision, the few students who are lucky to get into the UC system will pay much more, receive less financial aid, and will be taught be fewer faculty members. This is the ultimate vision of downsized version of public higher education. Let us hope that the Regents have the insight to see that not only do these plans fail to make educational sense, but they also do not make fiscal sense.

Why Options A, B, and C are Bad

2010-10-18T08:56:00.000-07:00

While it looks like some senate faculty leaders and members are planning to support the new proposed Option C for the future pension plan, it should be stressed that none of the proposed plans are good and none of them deal with the essential problem facing the university. As everyone agrees, the plans proposed by the PEB Task Froce, including Option C, do not deal with the current underfunding of UCRP or the unfunded liability. In fact, most unions and faculty committees argue that what needs to be done is to move quickly to fully funding the current normal cost, while starting to pay down the liability. Unfortunately, the new proposed plans serve as a misdirection to shield people from the truth, which is that everyone has to chip in now to save the current plan, and by creating a new tier, you only dilute the current system. In short, we need more people paying more not fewer people paying less.

When I have talked to senate leaders they tell me that they are supporting Option C because it is a lesser of evils, and they really don’t want A or B. However, I have argued that the senate committees should simply reject all of the task forces’ recommendations and instead simply support a way of funding the current system. For example, if the university moved now to having the employees pay 5% of salary and the employer paying 12% of covered compensation, we could quickly move to full funding of the normal cost. Moreover, by borrowing from the Short Term Investment Pool, the university could also begin the process of paying down the liability. This simple plan would require no reductions in benefits and would begin to tackle the central issue.
I have been told that the two main reasons why the Office of the President did not follow the advice of the Academic Senate to move right away to full funding is that the medical centers do not want to pay their fair share and the state has still not committed to paying its part. While it may be difficult to get the state to come up with the money now, in the past, the state has agreed to owe the money to the university, and we can take out a bond to cover the current state costs. Furthermore, it is absurd for the medical centers to cry poverty when they brought in billions of dollars of profit last year.

To the supporters of Option C, it must be stressed that by pushing back the retirement age to 65, you will do great harm to staff and manual workers who retire in their mid-50s. Moreover, the unions, who represent most of these employees, will reject Option C, and so the whole plan will be dead on arrival.

The dissenting opinion from the PEB task force clearly states that Option C should only be supported if it comes with a credible process to protect total remuneration. In other words, the deal on the table is to accept benefit cuts and contribution increases for future employees in order to guarantee an increase in salary for current faculty and staff. Not only will this create a generational conflict, but it relies on a vague promise of salary increases that the university has a habit of breaking.

Another concern is that the new proposed tier would extend extra retirement packages for the Senior Management Group. Once again, Option C does not prevent this type of movement of wealth to the top, and the reliance on salary increases to make up for lost benefits will most likely follow the current path of rewarding the people at the top. Also, since the Cost of Living Adjustments are limited to 2%,the result is that medium- and low-wage workers will see a dramatic decline in their retirement income as the costs of retiree healthcare escalates.

Another problem with Option C and the other plans is that they call for current employees to pay at least 7% of income in order to stay in the current system. In other words, to motivate low- and medium-wage workers to choose a cheaper benefit, employees contributions will be inflated above historical levels.

Please write your senate friends and leaders and tell them to vote “No” on A, B, and C.

Unions Respond to Proposed Pension Changes

2010-10-11T07:56:00.000-07:00

A coalition of UC unions has put together a set of shared principles regarding the UC pension system (UCRP). We plan to present the following at the next Regents meeting November 16-18:

1. Since unions represent 45% of the employees currently covered by UCRP, any changes to our pension plans will have to be accepted by represented workers. Collective bargaining on proposed benefit changes must precede, not follow, such changes for unrepresented workers. 

2. The Union Coalition of the University of California (UCUC) is united in our rejection of the proposed pension benefit cuts: the second tier and UCRP opt-out/DC plan choice. The proposed pension changes do not improve the fiscal health of UCRP, are divisive and unfair, and target low- and middle-income workers disproportionately. Similarly, we reject the eligibility and cost-shifting changes to the retiree health benefit as premature because plans to pre-funding the benefit have not been fully explored. 

3. We are willing to consider a plan that would make UCRP more secure and continue its tradition of fair treatment. We are also willing to consider a plan to prefund the retiree health benefit to maintain the current level of benefits and the current eligibility criteria. 

4. Keeping the UCRP adequately funded is the key issue. We suggest that the university moves quickly to fully funding the normal cost of UCRP in 2011, using employer and employee contributions. Restarting a higher level of contributions earlier will keep future costs down and capture available funding from the medical centers and contracts and grants. Total contributions must then gradually increase at levels needed to keep the plan healthy. Because of currently underfunding, we realize the plan can not to go to 100% funding in the near future, so the goal should be to keep it at healthy funding levels. Since none of the proposed plans by the task force will reach 100% funding in the next ten years, we believe the university should change its funding policy to reflect this reality. We support borrowing from STIP if necessary to fund the normal cost in 2011 and beyond. We request an adjustment of several of the actuary assumptions to more  accurately reflect current and future employment statistics (i.e. the predicted salary increases, inflation rate). 

5. How much of the total contribution is borne by the employee is the subject of collective bargaining. However, we believe the university should return to the historical ratio between employer and employee contributions (5:1). Further, any increase in employee contributions should be coupled with salary increases. 

6. If the Unions are fully involved partners in shaping funding plans and preserving benefits, we would commit to partnering with UC in Sacramento to secure state funds for the UCRP. 

7. We demand joint governance for the pension plan through the creation of a pension board of trustees with equal numbers of current and retired plan participants and Regents or their appointees. Placing a union representative on the Investment Advisory Board only deals with one, albeit very important, arena of concern. The Union Representative to the IAB and an alternate must be chosen by the UCUC. 

8. To cut costs and promote fairness, the university must eliminate all supplemental retirement for highly compensated UC employees, including the following: The Senior Management Supplemental Retirement Program that puts an extra 5% into retirement savings accounts, along with any plan that would replace it; the 415(m) “restoration” plan that increases retirement income for employees whose UCRP income exceeds $195,000; and 401(a)(17) “restoration” plan that increases retirement income for 200 employees whose salaries are greater than $245,000.

It is clear from these principles that the unions are not just saying no to any new pension changes; rather, we are providing a more effective and fair solution. The simple fact of the matter is that the proposed changes by the PEB Task force do not address the central problem of funding the shared pension system.

On another front, several unions (AFT, AFSCME, UPTE, CNA) in consultation with CUCFA and members of the senate faculty welfare committees have put together an additional joint set of principles regarding possible pension changes:

1. We need to move to a full funding of the normal cost of UCRP. The suggested new tiers do not address this issue.

2. There has to be a credible plan for total remuneration approved by the regents.

3. We must begin paying down the UCRP liability now. This can be done in part from borrowing from STIP or Pension Obligation Bonds.

4.We need more people paying more into UCRP and not fewer people paying less.

5. There should be a full discussion of alternative plans with the inclusion of faculty, unions, and staff at all levels of the process.

6. We need a plan to pre-fund retiree healthcare.

7. We will work together to get the state to pay its share of the employer contributions.

8. The university should end supplemental retirement packages for Senior Managers.

9. Any changes to the pension plan and retiree health should not discriminate against low- and medium-wage employees.

10. We oppose raising the employee contributions to a high level in order to induce current employees to opt into a new system.

Please let me (bobsamuels_us@yahoo.com) know if you would like to sign on to these principles. We need to submit our documents to President Yudof by Oct. 13th.

October 7th: Get Out the Vote and Support Higher Education

2010-10-06T06:34:00.001-07:00

Throughout the country on October 7th, people will be demonstrating to support public education. This date also marks one of the last days people can register to vote for the November election, and so many groups are calling for joint activities to support officials who will defend public education.

This defense of public education comes at a time when privatization is gaining power in multiple ways. Not only are private citizens being asked to pay for increasing tuition costs at our public universities, but parts of the University of California are considering breaking all ties with the state. For instance, the Anderson School of Management at UCLA has announced that it would like to stop all state support in order to raise tuition and have more private control. In response to this privatization, we should ask if the business school will pay for the buildings it uses, which were built by the state. Moreover, will Anderson pay a tax to support the central administration and shared staff and maintenance? Also, should Anderson pay a high franchise tax in order to use the UCLA name?

As I have pointed out before, once a part of the university is considered to be self-sustaining, it usually means that it refuses to share its profits and contribute to the common good. For instance, most of the self-sustaining units were exempt from the furloughs and the departmental budget cuts. According to the logic of the Office of the President, the money-making sectors should keep their profits, but the state-supported areas have to suffer deep cuts.

The move to defend public higher education against privatization means that not only should we push for more state and federal funding, but we also have to fight against the myth of self-sustaining units. While some people think the university should be run more like a business, we have to realize that many large corporations only succeed because they live off of corporate welfare. Not only do companies receive huge tax breaks and subsidies, but they also profit from outsourcing their research and development to public universities. Just as the Anderson School wants to go private as it uses public facilities, free market businesses call for tax cuts, while they lobby for more governmental bailouts and handouts.

Let’s all rally together on October 7th to say no to privatization and yes to public education.

Pensions, Lies, and Videotape: An Employee's Guide to UC's Propaganda

2010-09-27T06:46:00.000-07:00

I write this post with great urgency. The University of California is about to decide on a path that will determine its future, and if the university's employees don't wake up and do some math, there may be no turning back. The basic truth is that the UC administration is misinforming its employees in order to get them to accept a reduction of pay and benefits; however to understand how the university is misleading its workers, one must first comprehend how the system is financed.

In its effort to convince employees that they should either choose a permanent 7% pay reduction or see their retirement benefits be reduced by close to 50%, the UC administration is simply misrepresenting the following issues: 1) why a high level of contributions is currently needed; 2) how the UC has historically funded retirement; 3) what are the most effective ways of dealing with the problem; and 4) how the problem will affect the future of the university. To respond to these issues, we can simply go to the videotape and look at the recent Post-Employment Benefits Town Hall (click here to see the video ).

The first major area of contention is the question of how we got into this mess. The university's simple response is that we were all on a contribution holiday for the last twenty years, and now we are paying the price. It is interesting that by using the term “holiday,” it sounds like we have all been partying, and now not only do we have hangovers, but we have to pay for the damage we all have done to ourselves and those around us. In response to this depiction, we must remember that it is the regents who have ultimate authority over UCRP, and so it is the regents, and not the employees or the state, who are responsible. Moreover, in Nathan Brostrom's Town Hall response to what happened to the pension fund, he does not even mention that the university lost $16 billion in its retirement investments during 2008-09, and he also does not state that it is the regents who have responsibility for these investments. And of course, the administration is turning to the regents to correct the problem after they have caused it.

To counter the fact that investment losses are in part driving the pension’s growing unfunded liability, the university argues that if we never stopped contributing, we would be over-funded. My response to this defense is that, yes, the regents were wrong to stop contributions, but we have to ask, where did the money go that the UC once put into our retirement system? Moreover, even if we did continue our contributions, the regents might have lost funds through high-risk investments.

As a recent study of the UC regents shows, the UC has placed much of its retirement investments in high-risk areas because the regents themselves stand to profit from certain types of investment. Thus, the move to private equity, hedge funds, and real estate was pushed by regents who have strong stakes in these areas. If this true, and no one has been able to disprove it, it is a very scary thought that the same regents will decide the fate of not only our retirement system but the entire UC budget.

Due to the massive investment losses and the failure to continue contributions, the university now faces the strong possibility of having to contribute over 20% of its budget to the pension for the next twenty years. This means that the pension problem is not just a retirement issue, but it is a system-wide problem. We are talking here about a permanent crisis coupled with permanent furloughs. After all, when the UC lost just 1% of its funding during the last two years, the administration imposed layoffs, furloughs, departmental reductions, and a major reduction of spending on instruction. Imagine what will happen when the UC has to put 20% of its budget into the pension program.

This frightening scenario doesn't have to become reality. The UC does not have to reduce its budget, and we can force the regents to do the right thing, but first we must counter several misrepresentations, including how the UC really spends its money.

In terms of pension contributions, we need to remember that only a third of the employer costs comes from the core budget, and the university itself argues that the state is obligated to pay that part. Since only one third of the UC employees covered by UCRP are state funded, the other two thirds of the employer contributions should be paid by the medical centers, external research grants, and other services. This means that even if the employer had to contribute 20% of covered compensation to the plan, it would only really be less than 7% out of the general budget, and if the state paid its share, we would lose nothing from our core budget.

It is also essential to point out that the administration misrepresented the facts during its Town Hall when Duaine Duckett argued that the UC would try to keep the historical contribution split of the employer paying twice as much as the employee. In fact, during the last decade of contributions (the 1980s), the employer contributed an average of 12% and the employees averaged 2.4% (a 5:1 ratio). This division is obviously nowhere near a two-to-one ratio, and so I must declare that the university is intent on lying about the past.

So as many people have asked me, why would the UC lie about this? The simple answer is that they want the employees to feel that they must pay a much higher part of their salary into the system to keep it healthy. However, the more complicated response returns us to how the UC budget works. Currently, most of the budget comes from the medical centers and external grants, and as we have discovered this year, the grants on the whole lose hundreds of million dollars each year , and the medical services make billions of dollars of profits annually. However, as we learned from the furlough fiasco, the medical centers do not want to pay their fair share, and the people being paid from external grants are afraid that if they ask the grant-giving agencies, primarily the federal government, to pay their fair share, the UC will lose many of its grants.

While for the last few years, the university has justified not starting contributions on the grounds that the state has to pay its part in order for the grants and services to pay their share, now we hear that the medical centers do not think they can pay their part even though they had over $5 billion of net profit last year. Due to their enormous wealth, the medical services are not only delaying the employer contributions, but they are calling for a defined contribution plan that the university is now considering.

As several faculty senate committees have argued and some of the unions now support, the first thing that has to be done to stabilize the retirement plan is to fund the full normal cost, which is about 17% of covered compensation. Moreover, we have to start paying down the unfunded liability, and by a total contribution of about 23% for the next several years, we could accomplish both of these goals. If we maintain the historical division of contributions, the university should contribute 19% (roughly a third from the state, a third from medical centers, and a third from grants and other services); meanwhile, the employees should contribute 4% of their salary. If we moved this year to this type of funding level, we would not have to change the retirement calculations or offer a new tier or a defined contribution plan.

Instead of accepting this type of rational funding plan, the UC administration is intent on creating a new system that redistributes wealth to the top, and if employees think that it is only the new employees who will be screwed, please think again. In order to motivate people to opt into the plan in 2013, the university plans to increase the employee contributions to at least 7%, while the new plan will offer a cheaper benefit for a lower contribution level. It is therefore untrue when university officials insist that the new changes will not affect current employees. Furthermore, by creating new plans, you pull people out of the current system, when what we need is more people paying into the common fund.

According to the university’s own account, the new tiers will not reduce the unfunded liability for the next twenty years, and the plan will only become fully funded in thirty years. Their suggested solutions are not only morally unfair, but they do not make financial sense. In one of the typical university misrepresentations, Brostrom simply says “When we look at the next 30 to 40 years, we have too few assets.” The real truth is that no one can predict what will happen with the financial markets in thirty years, and therefore we must have a system where we continue to monitor our investments so that we can readjust our contribution levels. Of course, we also have to make sure we are making the best investment decisions, and this is why the unions have argued for shared governance over the pension plan.

In response to the union coalition’s request for employee representation on the pension investment board, President Yudof wrote that it is unnecessary because the UC has been outperforming its competitors by averaging an 8.9% rate of return during the last twenty years. However, Charles Schwartz has shown that the UC has been underperforming since 2000 when it started to outsource the management of many of its investments. While it may not be a lie to proclaim that the UC has outperformed its “benchmarks,” the question remains concerning the value of the benchmarks UC continues to use for comparison. Moreover, while many large investment funds lost 30% of their value during the global fiscal meltdown, most of these funds used the same questionable practice of moving funds into high-risks assets. What we need for the university to do is to at least acknowledge that their investment policies may have contributed to the under-funding status of the pension plan because without this acknowledgment, it will be impossible to make better decisions in the future.

One possible hope from the PEB Town Hall is that the university promises to listen to the faculty senates, and so it is necessary for faculty to make their voices heard on their local campuses. Faculty have to clearly reject the new proposed plans, and they have to push for a more equitable and effective funding policy. Unfortunately, things are moving fast, and the administration plans to discuss the new changes at the next regents meeting in November and then possibly vote on them in December. If staff, faculty, and unions work together to fight for a better plan, we can reverse the administration’s intended changes.

Moody’s Resets the UC Agenda

2010-09-20T09:41:00.000-07:00

During a recent press conference discussing the changes in the UC post-retirement benefits, one of the university budget officers declared that the efforts to reshape the pension plan have already been applauded by Moody’s in their latest bond ratings. Looking at the investors’ service report dated (Sept. 9 2010) “MOODY'S ASSIGNS Aa2 RATING TO UNIVERSITY OF CALIFORNIA'S, LIMITED PROJECT REVENUE BONDS 2010 SERIES E AND F; UNIVERSITY'S OTHER RATINGS AFFIRMED WITH STABLE OUTLOOK,” we find the following: “The University's retirement health and pension plans represent a significant and growing liability and expense of the System. We believe the University will need to take significant steps to either curtail the benefits or improve ongoing funding of the costs in order to sustain its long-term credit quality. However, the University has been pro-active, creating a taskforce dedicated to provide recommendations to modify the current benefit design that should result in a reduction in the liability.” Here the bond raters clearly indicate that if the university wants to maintain its high long-term credit rating, it must show that it is willing to “curtail” or “modify” retirement benefits.

The push to drive down the costs and value of the UC retirement plan is coupled with the claim that the university is still in a healthy fiscal state because it remains, “one of the premier higher education systems in the world, serving over 220,000 students, conducting over $3.7 billion of research annually, and generating in excess of $5 billion of net patient revenue in fiscal year (FY) 2009 at its five academic medical centers.” It is important to note that while the medical centers continue to rake in huge profits, they are now apparently resisting contributing their full share of the employer pension contributions. The PEP Task force hints at this point by stating that, “if the University funds the State share of PEB costs immediately, it cannot be assumed that other fund sources will be able to afford their share without some time to revise their operating models and assess the impact of faculty, students and staff.” The “other fund sources” mentioned in this report are the medical centers and research grants that should cover 67% of the employer contributions.

Of course, Moody’s does not mention that the medical centers do not want to share their profits, and the research grants may already be costing the UC money; instead, the bond raters stress how the UC is currently rolling in unrestricted funds: “Sizeable balance sheet that remains highly liquid, with $3.5 billion of unrestricted financial resources ($5.9 billion excluding post-retirement health liabilities) and active treasury management monitoring a short-term investment pool exceeding $10 billion.” Since the UC is only paying its retiree healthcare costs on a “pay-as-you-go” basis, the university currently has close to a combined $16 billion in its unrestricted funds and short-term investment accounts, which is not bad for an institution that is supposedly facing a fiscal crisis.

One of the things that is helping the university to increase its revenue as it cuts costs and benefits for workers is its ability to use low interest rates to take on a huge amount of debt: “Significant capital needs likely to result in rising borrowing levels; debt outstanding has grown from $8.3 billion in FY2006 to over $13.3 billion in FY2009 and including new borrowings since the end of the fiscal year, a 61% increase; however we believe management and the board will remain prudent and focus on utilizing debt strategically in a challenging economic environment.” Like the rest of America, the UC is addicted to debt and continues to increase both its financial holdings and its need for credit.

While the university appears to have unlimited access to cash, the bond raters once again warn that the system is plagued by unionized workers, governmental regulations, and high healthcare costs: “Substantial exposure to healthcare sector (29% of operating revenues) and associated credit challenges, including generally more volatile operating performance, high susceptibility to regulatory and government payor changes, coupled with unique stresses on California healthcare, including unionized labor, and seismic requirements.” Here we see the underlying neoliberal agenda of the bond raters surface; according to this logic, the only thing holding the university back from making more profit and taking on more debt is the fact that there are regulations, unions, and employee benefits. If only the university didn’t have to worry about pesky things, like its employees, even more credit would be available.

One area where Moody’s thinks the university can improve is in its ability to extract more money from students: “The University has implemented significant tuition increases in the last year and is likely to continue to implement substantial increases. We believe constraints on future growth in this area will largely be mission-based and politically driven as market drivers would likely allow the University to grow tuition revenues at high rates, especially if the University was willing to seek out a greater proportion of out-of-state students.” According to this neoliberal logic, the only thing preventing the university from charging more is politics. While we might expect bond rates to make this type of political anti-political statement, it is important to stress that the more the university relies on debt and high finance, the more it has to follow the will of the raters.

One of the central demands of Moody’s, which is matched by the UC administration, is the need to wean the university off if its reliance on public funds. This move for privatization is related to an updated accounting of the lack of state funding: “Funding from the State of California (debt rated A1) is likely to remain very challenging for the next several years. The State's support accounted for 14% of operating revenues during FY2009, reflecting a decline in state appropriation revenue of $561 million or 18%. In FY2010, the reduction is estimated to be an additional $637 million.” While it looks like the university lost $1.2 billion dollars during the last two fiscal years, it is important to stress that much of this money was replaced by federal recovery money: “As of May 26th, management reports that the system has received $837.8 million in ARRA funding.” I want to emphasize that this ARRA money is not federal grant money; rather, these funds were used to reduce the overall state reduction for the last two years to under $400 million. In other words, during each year of its fiscal crisis, the UC lost about 1% of its total $20 billion budget. However, it is virtually impossible to account for how much money the UC receives each year from the state because of the way California has been paying its bills: “In FY2010, the State deferred $250 million from July until October and an additional $750 million was deferred until the end of the fiscal year. The University has used its own liquidity and borrowings under taxable commercial paper to bridge this funding gap.” In other words, UC is not able to account for how much money it gets from the state each year because it is involved in a complicated system of lending and borrowing state funds.

While we still do not know exactly how much money the university has lost from the state, we do know that even during the fiscal crisis, which justified furloughs and layoffs, the UC continued to increase its revenue and profits: “Moody's believes that the University's demonstrated ability to grow financial resources through operating performance, investment returns, and philanthropy should support planned strategic capital investments and additional leverage. UC's financial resources have grown from approximately $11 billion in FY2002 to nearly $13 billion in FY2009, including the recognition of over $2.3 billion of post-retirement health obligations.” Due to the diversified nature of its funding streams, the UC is able to claim poverty, while it brings in record profits.

One place where the university has performed well is in its ability to stay highly liquid: “The University's policy is to not allow more than $200 million of CP [commercial paper] to mature on any given day, therefore limiting maturities within a given week to $1 billion. The University retains significant liquid investment holdings, including $630 million of U.S. Treasury and Agency securities not on loan as of June 30, 2010. The University also holds additional U.S. Treasuries and Agency securities on loan ($2.0 billion). In addition, the University holds over $6 billion in corporate commercial paper and other investment grade fixed income securities that could be liquidated within a week.” The university thus has a high level of debt but also a high level of assets it can cash in at a relatively short notice.

While the university clearly does not face a fiscal crisis, it does have a very high level of debt due mostly to ongoing construction projects, and while the bond raters are pushing the UC to reduce its retiree liabilities by reducing benefits, this report also shows that the unfunded liabilities are mostly an accounting figure used to justify further reductions in employee costs. If the university wants to reduce its debt and its reliance on the neoliberal investment services, it is clear that it has to change its focus from construction to instruction.

The Regents Must Have Two Heads

2010-09-17T08:34:00.000-07:00

After the UC Regents voted to increase employee contributions to the pension plan, they quickly moved to the next important business, which was to vote for special compensation packages for some of the highest paid people in the system. As State Senator Leland Lee wrote in a press release, the regents voted for executive salary increases totaling $6 million, and they also approved the plan to hire more administrators for a an additional $2.4 million annually. My favorite example of executive excess is UCLA Medical Center CEO David Feinberg who got a $400,000 raise and will now make $1,330,000 per year.

So after another budget presentation about the huge UC deficit, which may require another round of student fee increases, the regents and senior management must have gone to their second brains in order to approve a series of obscene compensation packages. I simply do not understand how they can justify cutting the benefits and total compensation of most of the employees, while they immediately move to increase the pay and benefits of the highest earners.

As I told President Yudof during my public comment minute, not only does it look like the university is intent on robbing the poor to give to the rich, but they cover this reverse income distribution with a rhetoric of fairness and equity. I also said that if he wants to put together a task force to reshape benefits, it makes no sense to have zero union representation on the task force. After all, 45% of the people in the pension plan are unionized, and any new deal will have to go through the unions, so why does Yudof continue to form tasks forces and commissions that exclude almost half of the employees?

On a brighter note Bob Anderson and Dan Simmons from the Academic Council asked some tough questions and made some positive statements. Perhaps we now have an academic council that will hold the regents and senior management accountable.

The Senate Council has Spoken, but will the Administration Listen: A Rejection of the Commission of the Future’s Recommendations

2010-09-14T08:35:00.000-07:00

Last week, I discussed how the senate faculty members of the Post-Employment Benefits Task Force wrote an effective criticism of the plan to restructure UC’s retirement benefits. I would now like to examine the senate’s “MEMORANDUM TO THE UC COMMISSION ON THE FUTURE FROM THE UC ACADEMIC COUNCIL: Senate Response to the Second Round of the Working Group Recommendations.” Much of the council’s response relates to the expanded recommendations that were added by senior administrators after the working groups had submitted their recommendations: “Council observed that many recommendations are similar to prior recommendations and felt that the Working Group recommendations address issues in a far more thoughtful, detailed and comprehensive manner than the Expanded Recommendations or the recommendations from the Council of Vice Chancellors. Several Senate agencies expressed discomfort with the lack of information about the provenance of the Expanded Recommendations. UCSD notes that this ‘makes the process look secretive and could imply some hidden agenda by the Commission or by the administration.’” The senate faculty members are politely pointing out here that they did not expect the administration to rewrite the working groups’ recommendation at the last minute.

The way that the expanded recommendations were introduced challenges the concept of shared governance and makes it seem that senior administrators ask faculty members to contribute, but if the administration does not like the outcomes of the faculty’s input, senior management feels free to make changes without consultation. Moreover, many of the new recommendations replace shared governance with central control: “Respondents were concerned that many of the proposals would undermine ordinary processes of University governance (UCB). The proposals often imply establishing systemwide structures and reporting, which can threaten local autonomy and can become inflexible unfunded mandates, straining diminishing administrative resources (UCB, UCSD). Council is wary of excessive centralization, and asks that specific plans for systemwide initiatives be reviewed once they are developed.” Here we see senate faculty pushing back against the desire of some people from the Office of the President to replace campus autonomy with a more centralized decision-making system.

Not only does the council reject this process of centralization, but they also question the entire outlook of the administration: “Finally, UCFW expressed disappointment at the scope of the recommendations. UCFW notes, ‘Rather than focus on the real fiscal problems that need to be fixed, the Commission deals largely with simple problems that can be fixed administratively.’ They argue that UC needs to ‘tackle issues that impact the future existence of the University.’ UCB concurs that the recommendations should focus on ‘transformative (as opposed to incremental) change.’” By translating most fiscal problems into administrative problems, the new recommendations push the solutions into the hands of the central administration.

One clear example of this attempt to extend the reach of the central administration is in Recommendation 6, where we find the call for “Strategic academic planning in a systemwide context” and “easier cross-campus enrollment and curricular collaboration.” In response to Expanded Recommendation 1, the faculty clearly question the need to “Collect information on effectiveness of academic program reviews including (1) the elimination of unnecessary program duplication, (2) intra-and inter-campus program consolidation, and (3) programs discontinued due to low enrollment, low degree production, and/or quality concerns, and those not responsive to state need or student demand.” The senate faculty members also disagree with Expanded Recommendation 2, which calls for the central administration to, “Collect information on policies to ensure effective curricular design and planning, including curricular offerings, and alignment of faculty course assignments with workload policies.” In their criticism of these new recommendations, the council questions the authority of the administration to make these changes: “All three of these recommendations address issues in the purview of the Academic Senate. Moreover, many respondents noted that the Senate has in place very effective, regular, and thorough procedures for academic program and course reviews (UCI, UCM, UCSD, UCEP, AdvGrp).”

Many of the faculty senates question the need or ability for the central administration to involve itself in campus curricular decisions: “ Some members were offended that the recommendations assume that academic units are not meeting core teaching requirements. Others felt that this information already is available and an extra layer of reporting is unnecessary (UCI, UCLA, AdvGrp). However, they would support a mechanism to collect existing information, as long as it does not increase the burden of reporting requirements (UCSB, AdvGrp). Some took issue with the notion that homogenizing the curriculum is desirable, arguing that curricular diversity across the system is a strength (UCB, UCSD). Requiring cross-campus collaboration (especially extending automatically granting course credit beyond the scope of SR477 and SR544) would stymie innovative curricula and ignore different approaches to disciplines and course content. They particularly questioned the meaning of the phrase ‘unnecessary program duplication.’ Who determines this, using what criteria? (UCSB, UCEP, AdvGrp). We note that each campus must maintain a core academic program and be allowed to develop a full range of disciplines (UCM, UCSB) and that programmatic funding priorities should not be made based on a short-term assessment of labor market demand or student interest (UCSD). Finally, low enrollment or degree production are not sufficient criteria for disestablishment, and decisions regarding program elimination should be determined by those qualified to render such judgments, that is, the Academic Senate (UCSD, AdvGrp). Council prefers the approach in Size & Shape 6 and Education & Curriculum 4. The Regents have delegated authority over the curricula to the Senate, and Senate bylaws clearly assign power to the divisions to approve and supervise all courses and curricula (UCLA, UCEP).” The senate faculty groups clearly reject the central administration’s desire to usurp the authority of the faculty in order to eliminate programs and transform curricular content.

The senates also resist the need to move all of the campuses to the semester system: “Senate agencies strongly disagreed with this recommendation. Respondents argued: 1) the financial benefits have not been demonstrated via a cost/benefit analysis (UCI, UCSD, UCEP, AdvGrp); 2) no information was presented showing the ways in which transfer is impeded by the calendar (UCEP, AdvGrp); and 3) this project should not proceed or be allocated funds at a time of constrained resources (UCD, UCI, UCLA, UCSF, UCEP, AdvGrp). Moreover, the increased burden on faculty workload would negatively affect faculty morale. Some noted that since eight campuses are on the quarter system, synergies already exist (UCSD, UCEP, AdvGrp).” Many of the campuses have already voted against this change, so it is strange that it would be recommended by the administration.

Another area of concern for the senate faculty is the recommendation to increase nonresident admissions to meet campus capacity, reaffirm the 60:40 ratio of upper division to lower division, and move towards a 1:2 ratio of community college transfers to freshmen: “Council conditionally agrees to most elements of Size & Shape 8. Council supports the Master Plan, but notes that the University’s commitment to the Master Plan should be contingent on the availability of state funds, as well as on the strength of the transfer pool (UCB, UCI, UCSB, AdvGrp). UCI questions whether a 60:40 upper to lower division ratio allows for a 1:2 ratio of transfers to freshmen. UCM comments that some community colleges are not adequately preparing students, and UCEP notes that more information on the progress of transfers is needed. Finally, the state should provide greater funding for upper division students before UC increases the number of transfers.” The council correctly stresses here that someone has to actually crunch the numbers to see what happens if the university expands the number of upper-division students through transfer as it reduces the number of freshman enrollments.

The council also strongly disagreed with Expanded Recommendation 3: although some faculty members do support the targeted expansion of self-supporting terminal Master’s degrees. Some concerns include: “1) Use of University resources. Council cautions that self-supporting programs usurp campus resources and should not be built on existing courses and infrastructure (UCD, UCSB). An analysis of potential competition between self-supporting and state-supported programs must be part of the approval process of any self-supporting program (UCD).” Many senate faculty committees have questioned the financial and academic soundness of promoting self-supporting programs that often end up drawing funding away from the core mission: “As with online education, the proposal would divert resources to new endeavors that are outside the core of the University based on the sometimes dubious assumptions that they will generate revenue. But the revenue goal is unrealistic, as it is based on high- cost MBA programs. The University is unlikely to generate ten times the annual net revenue by expanding to other areas. Choosing an arbitrary revenue target is not good academic planning (UCI, UCLA, UCEP).” The faculty have rightly concluded that many of the new proposed money-making schemes may actually cost money, while they function to undermine educational quality.

This criticism of the central administration’s push for privatization is also present in the senate faculty’s resistance to online education: “We reiterate that before proceeding beyond the pilot project, the University must evaluate course quality and cost effectiveness (UCLA, UCSD, UCSF). The proposed timetable and scale in this recommendation are unrealistic and incompatible with a rigorous process of evaluation (UCB, UCI, UCEP, AdvGrp). Similarly, while we restate our opposition to undergraduate online degrees pending evaluation of the pilot project and further consideration by the Senate, we will not restate our concerns about the appropriateness of online instruction in the UC context.” The council wants the university to slow down and first test online courses before it decides to increase the number of these classes.

In the coming months, we shall see if the administration is really taking the senate faculty’s views into account. If not, faculty should join with student groups and unions to fight this move to centralize and privative the University of California.

UC Offers New Pension Plan to Re-Distribute Wealth to the Top

2010-09-08T09:11:00.001-07:00

Many pages into the UC Post-Retirement Benefits Task Force Report, one discovers that not only will the new proposed plan reduce the retirement benefits of many new hires by 50%, but the university also intends to increase the retirement payouts to the highest earners in the system. For example, under proposed plan A, people making $67,000 would see their average retirement payout go from $9,750 to $4,980, and their retiree healthcare benefit would be reduced from $6,135 to $3,313. Meanwhile, a senior manager making $250,000 in plan A, would face a retirement reduction from $66,000 to $50,000. While it may seem unfair that a person making a lower salary loses 50% of his or her retirement, but the person making $250,000 is only reduced 25%, we are told not to worry because social security will make up the difference for the person with a lower salary.

The central argument put forward by the steering committee of the Task Force is that since low-wage workers make most of their retirement income through social security, they can survive on a more reduced pension. However, the dissenting opinion by faculty and staff reveals the inequality built into this proposed system: “The Task Force report presents a graph showing the income replacement provided at various income levels by current UCRP, Option A, and Option B for employees retiring at age 65. This graph obscures the fact that Options A and B both represent a drastic reduction in pension benefits for those who retire in their late 50s, the average retirement age of UC staff. Option A would reduce the UCRP benefit of an employee retiring at age 60 with a salary of $55,000 by 56.8%, while Option B would reduce it by 42.4%.” If we factor in the current average age of retirement for particular groups of employment, we discover that the people making the lowest salaries will have their pensions reduced the most.

While current employees may feel that they have escaped this new system, it is important to note that all employees will be allowed to opt into the new tier, and the university will induce people to buy into a reduced benefit by raising the employee contribution level higher than the level for the new plan. At our last benefits briefing, we were told that in 2013, the employee contribution may go to 7% or even higher. According to the dissenting opinion of the faculty and staff, this type of forced choice may be illegal: “Historically, employee contributions to UCRP for employees enrolled in Social Security have never exceeded 3%; raising contributions above 7% fundamentally alters the terms of UCRP and has the effect of coercing current employees to “choose” the new plan. This coerced “choice” raises questions.”

The dissenting opinion not only objects to the new proposed plans on the grounds that they will create a great inequality in the system, but it is also clear that the proposed new tier will do nothing to bring down the costs of the system for the next ten years: “The employer normal cost of Option B, 9%, is higher than the 7.3% employer normal cost of Option A. However, as the Executive Summary itself documents, Options A and B result in the same cost to the operating budget for the years 2011-2021.” Since the proposed system is unjust and will not reduce the operating budget in the next ten years, it is unclear why the steering committee of the task force decided to recommend option A and B.

What is clear, however, is that the task force is controlled by people who are dedicated to increasing compensation at the top. As the dissenting opinion argues, “In recommendations #10 and #11, the Steering Committee proposes “restoring” benefits to those whose salary exceeds the IRS covered compensation cap. The Academic Senate is on record as opposing Recommendation #10 (Letter from Senate Chair Croughan to President Yudof, 03/08/09). Recommendation #11 appears to be a mechanism to extend retirement benefits (admittedly not drawn from the UCRP trust fund) to these highly compensated individuals in ways that are less visible to the public. While we advocate competitive total remuneration for all UC employee groups, it is unseemly to provide a large “restoration” of pension benefits to highly compensated employees at the same time that pension benefits of other groups are being curtailed; the effect on faculty and staff morale and on the University’s public relations would be highly detrimental.” It is strange that the UC uses social security income as a justification for cutting the benefits of low-wage workers, but supplemental retirement packages for the highest compensated people are justified on the grounds of the need to retain “talent.”

Of course one of the great talents of the senior management group is their ability to increase their own incomes, while they claim that everyone else must sacrifice. The dissenting opinion brings this message home by showing how the proposed benefit cuts represent a sustained reduction in compensation for most employees: “It should not be overlooked that the University’s credibility with current employees will be severely damaged, and it will be understood that furloughs are to be replaced with permanent cuts in total remuneration---furloughs by another name.” As I have argued, the retirement liabilities are being used to scare employees into accepting reduced pay and benefits; let’s all join together to fight this pernicious move.

Let the Great Pension Scare Begin

2010-08-31T08:42:00.000-07:00

Throughout the last year, I have discussed many of the ways universities are scaring faculty and workers into accepting lower salaries and benefits as their workloads increase. This great squeeze echoes the general move of our “winner-takes-all” economy; workers are being asked to do more for less as the wealthiest among us continue to increase their earnings and political power. In the case of the UC system, I have documented how an exaggerated fiscal crisis helped to usher in furloughs, layoffs, and increased fees and tuitions, and I have warned that the retiree liabilities will be used to institute a permanent state of fiscal crisis. We have now entered fully into the great pension scare.

My argument is not that UC employees should reject any increase in their contributions to the retirement plan; however, I have stressed that we need to understand the truth about the financial status of the university and the pension plan. Unfortunately, university officials cannot stop themselves from circulating half-truths as they hope to force more concessions from workers. To begin my analysis of this administrative strategy, we can look at a recent article from the Chronicle of Higher Education entitled, “As Pension Costs Rise, Public Colleges Pay the Price.”

This article opens with the usual rhetoric of panic and crisis that we find in most pieces dealing with public pensions: “Pension costs are spiraling out of control at the University of California, which, unlike most college systems, runs its own pension plan. Within two years, the 10-campus system expects to contribute $700-million per year just to keep its plan afloat—nearly as much as the cuts in state support last year that generated protests and threw the system into crisis.” The first thing to point out about this statement is that it does not distinguish between the amount the university itself has to pay and the amount it will make external grants and services contribute. Since the UC itself claims two thirds of the employer contributions will come from external sources and services, the $700 figure can be reduced to $230 million. Moreover, the university is asking the state to pay for the $230 million, and while this funding from the state does not seem likely this year, it could be arranged in the future.

We also have to question why The Chronicle sought to compare last year’s protests over the state reductions to the pension issue. It appears that they are fueling the idea that the greedy workers are making tuition costs go up because they refuse to give up their great pension deals. This common discourse of pension envy is coupled with a repression of the true cause for the university’s financial woes: “But the recession reduced the university's investment by $16-billion, or a third of the plan's value. Now, in order to keep the fund solvent, the system and its employees must contribute billions of dollars in the coming years just as the system struggles to survive deep cuts in state support. Workers will most likely be paid less over all, and campuses will need to divert.” The first thing to note about this passage is that it begins by simply blaming the loss of $16 billion on the “recession.” There is no acknowledgment here that perhaps bad investment strategies are the real cause for the pension’s underfunding. Furthermore, the article predicts that the need to fund the pension plan will inevitably result in the decrease in workers’ salaries and a diversion of university funds.

In a now repeated view, Peter Taylor, the head budget person for the UC system, argues that the university will have to spend more money on the pension than it does on instruction: “Unless it makes changes, the system is on track to spend more on retiree pensions and health care than it does on instruction by 2014, says Peter J. Taylor, the system's chief financial officer.” What Taylor does not say here is how little the university currently spends on instruction, but the rhetorical strategy is to pit the students against the faculty and workers and blame the employees for both the increase in student fees (tuition) and the decrease in instructional budgets.

To help clarify the reality of the pension situation, we should keep in mind several important facts. The first is that many of the long-term projections for the pension liability and underfunding were made during the lowest point of the global financial meltdown. In fact, after the UC pension lost $16 billion in 2008 and 2009, it gained back $10 billion in 2010. This fact is important because many of UC’s projections do not take into account these recent investment increases. Moreover, we see that even if the UC employees contribute 5% of their earnings to the pension plan, they will only be adding $400 million to the fund, while a good investment year can bring in $10 billion. Thus, the most important issue is how the UC invests its money, and how it can protect against major losses.

The simple fact of the matter is that the huge swing in investment losses and gains makes it impossible to make any long-term predictions with any accuracy, and yet current accounting requirements force the university to predict future returns, interest rates, faculty salaries, and other unpredictable elements far into the future. Given that these accounting projections are always wrong, I have suggested that the university sets up a system to negotiate every year or every year the needed employee and employer contribution rate.

Another important fact is that, currently, the university calculates the normal yearly cost of the pension plan to be $1.4 billion, and as of March 30th, 2010, we had $37 billion in the pension investment accounts. To cover the $1.4 billion cost each year, the UC needs to put in about 17% of payroll (the total covered payroll is $8 billion). If employees contribute 5% of their salaries ($400 million), and the university only pays for the state-funded workers (one third of all employees), the university needs to pay out $320 million, and if the state does not pay this $320 million, the university can either take out a bond or borrow money from its own short-term investment fund to pay some or all of the amount.

While $320 million is not a small amount, we have to remember that the UC operating budget is over $20 billion. The rhetoric of crisis thus seems to be misplaced, and what we really have to look at is how the UC invests its money, and why it is trying to scare workers into accepting lower pay and benefits for more work. We also have to pay attention to the temptation for current employees and administrators to sacrifice future workers in order to keep their own pension benefits.

The university has now entered into a giant media campaign to convince workers that the UC system faces an immediate crisis caused by retirement issues. For instance, in the Los Angeles Times article, “UC retirement funds face a shortfall of more than $20 billion, report says,” we are told that “Yudof has warned of terrible consequences if the problem is not tackled quickly. ‘If we do nothing, in four years, the University will be spending more on retirement programs each year than we do on classroom instruction.’” Once again, the public media strategy is to oppose the interests of the workers against the interests of the students.

By repeating the claim that the university now faces a $20 billion liability, which will soon balloon into a $40 billion liability, UC administrators follow the right-wing attack on public pensions. Since virtually no one understands how these long-term liabilities are calculated, the university feels that it can use this scary number to turn the people against public workers and defined benefit plans. While I am not claiming that the UC system does not face a future problem, the extreme exaggeration of the problem makes it hard to determine the right solution. We should all keep in mind that the UC is currently only spending about $240 million on retiree healthcare and $200 million on the pension plan, and so it is absurd to make it seem that the UC will be $40 billion in the hole in just three years.

By using the huge future liability number, the Post-Retirement Benefits Task Force justifies moving the minimum retirement age move from 50 to 55 and the age for receiving a full pension from 60 to 65. The plan for people hired after 2013 would also reduce pensions by the amount of an employee’s social security. This change would reduce some people’s pension allowance by more than 50%. It is important to stress that the dissenting senate faculty report rejected the use of social security to reduce the pension payout. The dissenting report also did not support the Task Force’s suggestion to to have a second tier where employees could choose to pay a lower contribution rate and receive a reduced pension.

While some of the unions have endorsed the need to increase employee and employer contributions to keep the pension well funded, they have also rejected the need to adjust the age requirements and payout calculations. In fact, UC-AFT and AFSCME have been in conversation with senate faculty members in order to push for a united front against a two-tier system. Finally, after years of negotiating, President Yudof has offered the unions the chance to have one union representative to sit on the investment advisory board. The unions have decided to forward the name of Bob Samuels to Yudof. Let’s see what he says.

California Senate Approves Major Bill on Community College Faculty

2010-08-26T09:42:00.000-07:00

The state senate voted in favor of the Assembly Concurrent Resolution 138 by a 23 to 11 margin on Monday August 23rd. This bill calls for community colleges to staff at least 75% of their student credit hours by full-time tenure and tenure-track faculty. Moreover, the bill affirms the principle of non-tenured part-time faculty receiving equal pay for equal work. However, all of these requirements are based on available funding and collective bargaining agreements.

It is important to stress that in the California community college system, one cannot be full-time and not be on the tenure track. Unlike the UC and CSU system, there are no full-time, non-tenure-track positions, and community college faculty who are not eligible for tenure can only work up to a 67% appointment.

The current legislation is part of the AFT FACE campaign that tries to do two seemingly opposing things: increase the number of tenure-track positions and provide equity and job security for non-tenured faculty. While UC-AFT supports this effort for community colleges, we argue that this type of policy does not work for research universities since faculty members in these institutions have distinct job descriptions.

In the context of research universities, it is hard to determine what equal pay for equal work would mean because faculty are doing very different jobs. For example, the University of California contends that the reason it pays tenured professors so much more than non-tenured lecturers is that professors are required to do research, teaching, and service, but most lecturers only teach. While it is untrue to say that lecturers do not do service and research, we do recognize that lecturers are defined by their teaching responsibilities, and this is not necessarily a bad thing.

Since lecturers have teaching as their primary mission, they become central to the undergraduate mission of the university; and yet, a major problem exists because these teachers in charge of instruction are not members of their academic senates. In fact, lecturers are often referred to as “non-senate faculty” in order to stress their exclusion from shared governance. One of the results of this denial of democratic participation is that faculty senates often make curricular decisions without consulting the people who are actually doing the teaching. To correct this problem, UC-AFT hopes that in the future, lecturers will be granted full rights to participate in their faculty senates.

As lecturers have been denied their role in university shared governance, UC-AFT has concentrated on negotiating and enforcing collective bargaining agreements that improve the job security and equity of non-tenured faculty in the UC system. We have also shown how the working conditions of lecturers directly determines the learning conditions of undergraduate and graduate students, and while we have not pushed for pay parity with senate faculty, we have gained parity in benefits and academic freedom rights. Furthermore, unlike the AFT FACE campaign, UC-AFT has not sought to push for more tenure-track lines or total pay equity for part-time faculty. Instead, we have tried to make non-tenure-track positions as secure and equitable as possible.

Last year, more than a hundred lecturers with continuing appointment were given one-year layoff notices and hundreds of other lecturers in their first six years of service faced job losses. We are happy to report that almost all of the continuing appointment lecturers have had their layoff notices rescinded, and many of the other lecturers have been rehired. To get these jobs back, we had to expend a lot of time and resources on grievances, protests, and media campaigns, and it looks like we will have to continue this defense of our jobs and undergraduate education in the coming years. While we do not think we can legislate the UC into supporting non-tenured track faculty, we do intend to continue our efforts for promote equity and job security for all faculty members.

Oh Canada!: We have a Global Higher Ed Problem

2010-08-19T07:47:00.001-07:00

I recently returned from the Coalition of Contingent Academic Labor meeting in Quebec City where I heard representatives from Canada, Mexico, and the United States discuss the current challenges facing higher education. It turns out that things are bad all over, and even the seemingly progressive Canadian system is being undermined by tax cuts and right-wing ideology. Not only are Canadians being asked to pay more tuition for an education that was once free, but part-time teachers are losing their rights to unionize and strike, while university budgets are being slashed. In fact, the current conservative government in Canada appears to being taking its marching orders from America’s backlash against public education, public employees, and public pensions.

Three growing shared trends that many speakers mentioned were the casualization of the labor force, the defunding of the public sector, and the privatization of public institutions. All across the globe, it appears that there is a growing desire for higher education, but the increased demand is being met by a decrease in supply, and the result of this mismatch is that public institutions are being stratified, while private corporations step in to take advantage of desperate, low-income students. Moreover, many of the private, for-profit organizations throughout the world are using the same business model to cut costs and increase profits, and this system relies on eliminating job security (tenure), increasing managerial control, and relying on the Web to deliver course content to students/consumers.

In the developed world, the same story is being repeated: due to a growing divide between the super-wealthy and everyone else, there is an increased demand by the elites to cut taxes and reduce the funding for public education. Since these public schools are losing their state funding, they feel that the only thing they can do is to copy the practices of private institutions, and a favored model is to look to corporations to fund research, while tuition is raised so schools can cater to the rich. Furthermore, while the high tuition/high aid model looks like it protects some semblance of fairness, the result of this system is the decimation of the middle class. In fact, all of the global trends point to elimination of the middle and the rise of a two-tiered hierarchy that pits the wealthy against everyone else.

The solution to this global stratification should be clear; we need to defend the middle class, and a central way to do this is to fight for public funding and to rollback tax cuts for the wealthy and corporations. However, conservatives across the world have convinced the non-elites that we can no longer afford things like public higher education, and the real enemy is the public employees with their unions, pensions, and job security. In this context, the conservative solution is to get rid of all job protections and benefits so that everyone can be put in the same situation. In this type of race to the bottom, all that public employees can do is to fight givebacks and hold onto what they have.

Yet, what would it mean if all public employees started to fight back, and instead of running the race to the bottom, they reversed course and tried to push more people to the top. This strategy would entail fighting for tax increases for the wealthy and increased state funding for public institutions. It would also mean defending pensions, healthcare benefits, and job security as essential basic rights. Perhaps this campaign for the Race to the Top will be led from below, but it needs the support from all of our major organizations. Also, we need to put pressure on our political leaders to follow a more progressive agenda and stop being afraid of the conservative backlash.

How the Push for Online Degrees Hides the Cause of the UC's Financial Probelms

2010-08-03T08:14:00.000-07:00

Inside Higher Ed has a new article on Dean Edley and his promotion of online education as the solution to all of the University of California’s problems. It is clear from this piece, and Edley’s constant efforts at promoting a UC version of digital education, that the push for an online solution serves two important functions for the university’s administration: it hides the true causes for the UC’s fiscal problems, and it offers an avenue for more centralized control.

I have been writing for a year that the university has been blaming Sacramento for all of its problems because it does not want to look at its own issues. As I have shown, the central driving force behind the UC budget crisis is the loss of $23 billion of investments during the period of 2008-09. This huge loss dwarfs the state reduction of $600 million, and yet the university has never had to explain why and how it lost so much money and what it plans to do to prevent this from happening in the future.

Another major issues that is starting to get some attention is the idea that the university is losing money on its externally funded research grants. Even the Commission on the Future of the University has argued that the UC system is losing at least $300 million a year because its grants do not pay for the full cost of research. It is clear that a turn to online undergraduate education will not solve the research funding problem and will only function to obscure the investment losses.
However, one thing that the push for online education will do is to help the administration develop and control the undergraduate curriculum. As the Inside Higher Ed article states, the Berkeley Faculty Association “was particularly unnerved by the idea of graduate student-instructors being the “frontline of contact” with online students, as Edley put it. For some, that sort of talk evokes a model many for-profit institutions have used to keep payroll expenses low and administrative control high: have full-time faculty put together the syllabus, then hire less-expensive adjuncts to deliver it.” The idea here is that once the online courses are developed, the central administration can decide who teaches the courses, and the faculty senate will lose their current control over curricular decisions.

Edley’s response to the fear that the administration will take over and replace tenured faculty with adjuncts and graduate students is to argue that the online programs will generate huge profits that can be used to hire more tenured faculty, and this project offers the only hope for the economically challenged system. However, when Inside Higher Ed asked Edley and others to provide details on how the online courses would make money, they received the following response,” The university could not immediately provide the details of its financial modeling, but other documents suggest that the money would come from tuition, fees, and perhaps licenses for "premium access" to course content.” In other words, the UC has no idea how much money it will lose or gain, and it plans to use student fees and tuition to pay for the online courses.

It is interesting that the first comment on the Inside Higher Ed article comes from “Dean Dad,” an administrator who writes regularly for Inside Higher Ed: “It's increasingly clear that public higher ed won't be able to rely on the state to the extent it has in the past; that's especially true in California. As awkward as it can be to grow revenues, it beats cutting costs. The details matter, and I assume they'll evolve, but Edley is broadly right to look at ways to make the core educational mission self-sustaining.” The administrative logic here is that since states are cutting their support for higher education and because undergraduate instruction loses money, the only way to make education sustainable it to let it turn to online education as a mode of making money off of undergraduate students. Yet, as I have continued to show, undergraduate education already turns a huge profit, and these profits are used to sustain the unprofitable sectors like administration and external research.

Jerry Brown Releases Plan for Higher Ed

2010-07-29T06:29:00.000-07:00

Jerry Brown’s recently released plan for education has a few good vague ideas sprinkled amongst some very bad notions. Starting with the good, Brown does recognize the problem of increasing tuition due to the decrease in state funding: “Recent state budgets have raised tuition drastically, reduced the number of new students--as well transfers from community colleges--to CSUC, cut class sections so that students cannot get basic classes they need, and driven good professors to other states. Students are dropping out because of high costs and the extended time needed to finish. California’s historic public university research base is declining.” Not only does Brown stress that the reductions in state funding have led to higher tuitions and fewer classes, but he also laments the loss of professors due to budget reductions.

Is first solution to this problem is to following the current governor and demand that money being spent on prisons is transferred to higher education: “We must also reverse the decades long trend of transferring state support from higher education to prisons. We can do this without sacrificing public safety. For example, as Attorney General, I recently blocked a proposed $8 billion prison hospital expansion—which was unnecessarily expensive and which would have added substantially to our state’s deficit. By relentlessly pursuing similar cost savings, we can channel needed funds to our higher education system.” The problem with this solution is that it is hard to imagine how it can take effect without changing the Three Strikes law and major drug decriminalization.

The next solution that Brown proposes should scare all of us. Like the UC upper administration, Brown endorses online education as a solution to many of high ed’s fiscal problems: “ The introduction of online learning and the use of new technologies should be explored to the fullest, as well as extended University programs. Technology can increase educational productivity, expand access to higher learning, and reduce costs.” Brown’s take on distance education recycles all of the questionable premises that drive the current UC initiative. In this naïve assessment, Brown thinks that access can be increased and costs deceased by some magical form of high-tech efficiencies. I have already written why the result of this process may be to increase costs, produce more work for faculty, and lower the quality and reputation of the university’s education.
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The other great fantasy solution that Brown copies from the UC Commission on the Future of the University is to increase the number of transfer students: “Transfer courses should be closely aligned with, and accepted by, the CSUC and UC systems. For example, transfer students are often forced to take redundant courses to graduate from the CSUC system even though they have completed equivalent coursework in community college.” As I have previously argued, increasing the number of transfer students will only decrease the funding of the university since most of the UC’s profit is made from lower-division, high-enrollment courses that transfer students do not have to take. Of course since Brown, like most of the UC administrators, does not actually understand how the UC makes its money, all he can do is propose unrealistic and unhelpful suggestions. However, we must keep in mind that the other candidate is actually much worse. In other words, we face another election of holding our collective noses while we vote.

Another University Fights Back

2010-07-27T11:59:00.000-07:00

Check out this great video by professor Eva von Dassow from U. of Minessota. No, that is not me in drag, but she could easily be speaking about the UC system. She discusses how a small reduction in state funds is being used to justify major changes in the allocation of resources. Like the UC system, activites that make money are being supported, while basic educational and research activities are being starved. In her video, she makes the following important observation: "those programs engaged in the production of knowledge that is readily turned into the money are the targets of investment while the rest are to be downsized into an efficient credit and degree factory.” She also mentions that the university’s revenue has actually gone up, but still they are making dire cuts and forcing faculty and workers to do more for less.

In an interview with Inside Higher Education, von Dassow adds that the new budget cuts "leaves undiminished the numbers of vice presidents, not to mention the salaries of coaches. No, these highly-paid positions are not to be reduced. Rather, the university must shed faculty.” In the UC’s case, the loss of faculty is happening covertly by not replacing retiring professors and not rehiring lecturers; meanwhile the number of administraors keeps going up as the cost of administration increases. Even with recent efforts at administrative efficeincy, the university shows where its values are by continuing to hire more high-level, high-paid bureaucrats.

In response to von Dassow’s comments, a university spokesperson told Inside Higher Ed, “"Professor von Dassow's perspective is one of many faculty perspectives at the University of Minnesota. We certainly appreciate her taking the time to express it. The University Senate overwhelmingly supported the president's plan for temporary pay cuts and his operating budget was unanimously supported by our Board of Regents." Doesn’t this sound familiar: yes, the university values the input of respected faculty members, but sorry, the regents and the official committees are the only ones that really matter, and they really like what we are doing.

As I have been arguing in this blog, the next big fight will be over online education, and here, we will see if the faculty in the UC system have any power or values. The UC administration has decided to simply bypass the faculty senates by taking control of the online initiative. This plan, which seems modest at first, will give upper-management the ability to control who teaches, what gets taught, and how it is taught. In fact, Dean Edley has argued that an “army of graduate student instructors” will man the courses, which will be initially funded by outside private sources. The next step will be to expand the project for online degrees, and at that point, there will be no difference between education and mass marketing.

I ask faculty to speak loudly against this administrative takeover. The question is not so much whether the quality of the education will go down (it will) or that the university will generate extra funds (it won’t), the question is who will determine the structure and content of our classes and what will these changes say about our values and interests.

UC Regents Agree to Blame Sacramento and Congratulate Themselves

2010-07-16T10:38:00.001-07:00

One of the most annoying parts of any UC Regents meeting is the constant, time-consuming ritual of self-praise. Near the start of the meeting on July 13th, Chairman Gould announced that he would like to praise the board for their successful effort at turning anger away from Oakland and aiming it directly at Sacramento. In other words, the head regent wanted to make sure that people blamed the state and not the regents or the Office of the President for any of the UC’s problems.

Gould later responded directly to my public comment concerning the university’s loss of $23 billion in investments during 2008-09. He flatly said, “Over the last twenty years, our investments have outperformed our peers.” Not only is this statement completely false, but it reveals the defensive and misguided nature of the regents’ thinking.

Another great example of defensive group thinking occurred during the discussion of UC admission statistics. After stating that the system ended up with 2,000 more transfer students than they wanted, a regent exclaimed that this high rate of transfers shows that the Master Plan is still working. No one questioned why none of the admission targets were met, but the VP of Budget did warn that this level of over-enrollment means that the UC system now has 15,000 students that are not being funded by the state.

A very uncomfortable moment occurred when the ethnic breakdown of new admits was being discussed. On one of the charts, it showed that the percentages of new freshman who are Asian American, Latino/Chicano, African American, and American Indian have all gone up; however, next to Caucasian, there was no arrow. A regent asked why the percentage of white students didn’t also go up? I thought to myself, doesn’t he realize that you can’t have the percentage of all of the groups go up; after all, some group has to go down. Yet, in the delusional thinking of the regents, they should be able to increase every group, while they commit themselves to decreasing undergraduate enrollments.
One regent even ventured that the result of increasing student fees was that there was more financial aid available, and so there are now even more low-income students. No one stated the obvious that someone must be losing out.

Of course, the magic bullet presented at this meeting to solve both the budget problems and diversity issues was online education. In Dean Edley’s showy presentation on how the UC can use online courses to democratize elite higher education, he claimed that digital education is the new civil rights issue, and he ended his presentation with a slide stating “Si Se Puede.” I am sure that Cesar Chavez used this slogan to tell his people that they would soon have access to a high-cost, low quality educational option.

After Edley’s presentation, there was a press conference, and I asked him how UC is going to offer high-quality online education to low-income students if these are they very students who do not have broadband, fancy computers, and the needed software. He replied that the UC would have to provide students with new computers and broadband access, but it would only cost a small drop in the bucket.

Edley also announced that he has been going around with the governor asking private donors to support the pilot program that he hopes to roll out this Fall. I asked him if he was afraid that the donor’s might have a different agenda than the University of California, and he assured me that none of the gifts will come with any strings attached. I didn’t get to ask him about regent Blum’s business interests in online education, but it is clear that the regents are feeling defensive concerning recent media exposure of possible conflicts of interests.

One of the central ways that the regents and UCOP are trying to polish their public image is by showing how they will save money through administrative efficiencies. In a major move, the regents granted President Yudof the power to force campuses to adopt common systems and practices. It was clear that the Chancellors in the audience were not happy about their sudden loss of power, but they had to suck it up as the regents extended Yudof’s executive reach.

Here is my final conclusion; since the regents have no understanding or interest in actual education, they turn their attention to other areas like new community outreach programs, online education, green technologies, and diversity issues. Not once, during two long days of discussions, did I hear anyone touch on the subject of providing high quality education and research. It is clear that the faculty, students, and unions have to change the conversation and interupt the love affair between the regents and the Office of the President.

Alternative Commission to Present Survey Findings At Regents Meeting on July 15th

2010-07-12T12:38:00.000-07:00

Throughout the year, faculty, students, and employees have been meeting at UCLA to discus the UC fiscal crisis and the Commission on the Future of the University. We decided to form an Alternative Commission because the official commission did not have any union leaders, librarians, and lecturers as members, and the working groups had very little student representation.

One of the first activities of the Alternative Commission was to create and distribute a survey regarding the official commission’s recommendations and other related issues. So far, over 1,000 people have responded to the survey, and we will present the findings on July 15th at the UC Regents meeting in San Francisco. A full copy of the report on the survey can be accessed here.

A major finding of the survey was that most of the students have very little knowledge or understanding about the creation and role of the commission. Moreover, when we outlined the central commission recommendations, most of the students and faculty gave these solutions very low ratings. In fact, we asked people to grade the commission recommendations, and we compiled the following results:

1) The lowest rated recommendation was to reduce the teaching staff by 10%. The vast majority of responses rated this proposal as an F.

2) The second most unpopular idea was to eliminate some majors and to get rid of majors that are duplicated on different campuses. Once again, almost everyone gave this recommendation an F rating.

3) Another idea that did not garner much support was the proposal to schedule yearly fee increases of 10-15%. It is important to note that many people feel that the UC does need to do something about its finances, but students and faculty resist the idea of making students continue to pay for the decrease in state funding.

4) Responders also rejected the notion of different fees for each campus, and there was a strong desire expressed to maintain the unity and equality of the system by holding onto a single fee structure.

5) We also asked people about the idea of having more online courses, and once again, the vast majority of responses were strongly against this recommendation. Many people wrote comments on this idea, and they stated that the move to online education could wind up costing the university more money, while lowering the prestige and quality of UC instruction.

6) We also asked people about the idea of increasing professional fees by 15%, and while this recommendation did receive some positive support, most people felt it would hurt the students who did not pursue the most profitable occupations.

7) Another recommendation that did receive some positive support was the idea of increasing the number of out-of-state students. It is important to note that the people who did support this move wanted to make sure that the number of in-state students also increased.

8) Finally, the recommendation that received the highest support, somewhere in the D+ range, was the notion of three-year degrees. Most people thought that this was a strange idea since so many students can not graduate in four years, but some thought the three-year degree idea showed promise if it could be done correctly.

The UC Commission is Asking the Wrong Questions and Giving Bad Answers

2010-06-23T09:12:00.000-07:00

The key to the future of the University of California relies on our ability to answer several major questions: 1) How much does it cost to educate each graduate and undergraduate student each year?; 2) How much money is lost or gained by externally funded research; 3) How much will it cost to fund the pension and retiree healthcare?; 4) How much revenue is unrestricted and can be shared between units?; 5) How much waste is there in the system?; 6) Is there a way of improving educational quality and decreasing costs?; and 7) Can the UC pursue a more stable and effective investment strategy? While some of these questions are touched on by the Commission on the Future of the University, most of these essential issues are ignored or misrepresented.

On the positive side, the university has opened up the question of cutting waste and excess by proposing to save $500 million through some vague process of centralization and cost reduction. However, these proposals do not directly address the question of the increased number of administrators and the rapid rise in their compensation packages. In fact, during the time of our “fiscal crisis,” people at the top have increased their earnings, while everyone else lost money.

A hopeful move by the Commission is to look at the rate the university charges external research grants for indirect costs. The commission claims that many of these grants are losing money and that the university should be more aggressive in bargaining for a higher rate of support from external sources. What no one knows is which grants make money and which ones lose; moreover, due to the abstract way of calculating indirect costs, it may be impossible to determine the profitability of most research projects. There is also the question of whether the university wants to base its research decisions on economic criteria.

One reason why this issue of grants is so important is that many faculty members in the humanities and social sciences feel that their budgets are being robbed to pay for expensive scientific research projects. One again, due to the decentralized nature of the UC budget, no one knows if externally funded research is being subsidized by high-enrollment undergraduate courses. Yet, what we do know is that money generated by undergraduate instruction is going somewhere other than instructional budgets.

This question of undergraduate instruction brings us to the unanswered question of how much does it actually cost to educate undergraduate and graduate students. Since there has been no effort made to answer this question, many of the Commission’s recommendation are based on unclear assumptions. For instance, the UCOP appears to be pushing for a decrease in undergrad enrollment and an increase in graduate enrollment, but they have never studied what this change would cost. The Commission has also pushed for more transfer students and three-year degrees, but it is unclear if these programs will save or cost money.

According to my studies of UC salaries, class sizes, and course loads, the university makes a large profit on each undergraduate student and loses money on each graduate student, and thus it would be economic suicide to decrease undergraduates, while increasing the number of graduates. Even if one believes that the key to the future of the UC is to focus on graduate education, one should have some idea about the costs of this move, and yet no one is basing their recommendations on actual numbers or facts.

The speculative nature of the Commission and the Office of the President tells us that we are a long way from budgetary transparency, and the main reason for this lack of transparency is that the university has to simultaneously tell its bond raters that it is in great fiscal health, while it tells everyone else that it is deep in a fiscal crisis. By claiming a large budgetary hole, the university can impose drastic cost-cutting measures, like furloughs, layoffs, and increased class sizes; meanwhile, it increases its assets by diversifying its revenue streams.

Like most research universities in America, since 1980, the UC has made up for its loss of state funding by increasing tuition and bringing in more funds from research, services, and investments. One of the problems with this transformation is that universities claim that they cannot share the profits of the non-state-funded units with the state- and tuition- funded instructional budgets. The result of this budgetary system is that money is drained from educating undergraduates in order to support supposedly profitable units, and making matters even more complicated, is the fact the universities often invest their endowments, pensions, and operating cash in risky investment vehicles.

If we look at the amount of debt the UC has recently taken on ($13.2 billion) and if we account for all of the UC’s investments in the stock market, hedge funds, real estate, private equity, and securities ($65 billion as of March 2010), we see that its yearly budget of $20 billion is dwarfed by its financial stakes of $78 billion, yet none of these statistics have been presented to the working groups of the Commission. Instead, the university has reiterated dire predictions concerning the cost of the pension plan and retiree healthcare. In one of the their graphs presented to the Commission, they estimate how much it would cost the university to increase its current pension contributions of 4% of salary to 22% by the year 2019. This increase could overwhelm the entire system, so the UC has added that it plans to save $310 million a year by restructuring post-retirement benefits; as far as I can tell, this is the first mention of estimating the costs of changing retiree healthcare.

Since all of the members of the Commission’s working groups were given presentations on the UC budget by the Office of the President, we can be sure that driving the Commission’s recommendations is the idea that the university has to cut educational costs to make up for the decrease in state support and the increase in retirement costs. At no point were the Commission members briefed on the UC’s investments, debt, or actual instructional costs. As Aristotle argued, if you start off with faulty premises, there is no way you can arrive at correct conclusions.

The UC Gets Mixed News from the Legislature

2010-06-15T07:27:00.000-07:00

The state assembly and senate have responded to the governor’s request to increase the funding for the UC system by $305 million. While the assembly supports the increase, the senate has stated that they will only endorse the augmentation if the state brings in at least $2 billion in new General Fund revenues above the May Revise level. In other words, unless the state has a major increase in revenue, the senate will try to block the new money.

The assembly has also supported additional funding for the UC system so that the scheduled student fee increase of 15% can be brought down to 5%. So far, the senate has not decided on this fee decrease, which would cost the state $200 million.

Finally, in response to the UC’s request that the state fund the employer contributions for the pension, the assembly supports the governor’s idea that general fund allocations can be used for the pension. However, the senate decided to reject this new language. It looks like we are in for a long summer battle over the state budget.

Does UC Want to Invest Like Harvard?

2010-06-09T08:26:00.000-07:00

I have a Huffington Post article on how several schools in New England have followed the same high-risk investment strategy that the UC has pursued for the last several years. According to the Tellus Institute’s study of Haravard, Dartmouth, Brandeis, MIT, Boston University, and Boston College, by moving their investments from more stable assets to volatile gambles (private equity, real estate, and hedge funds), these universities have produced a growing income inequality at their campuses. Moreover, since they have now been forced to stop ambitious expansion projects, the surrounding communities have been devastated.

An important lesson that the University of California should learn from this analysis is that the investment strategies of hired traders should be closely monitored; this study also shows that the trustees and regents of these wealthy institutions often have a huge conflict of interest. Since many of the people overseeing universities now come from the world of speculative finance, they are unlikely to shift money into more stable forms of investments. Moreover, due to the tax-exempt status of these schools, they are more prone to engage in high-risk trading.

Another issue discussed by the Tellus report is that since these schools pay very little taxes on their huge real estate holdings, they end up impoverishing their home towns and cities. Furthermore, all of these schools continue to increase their huge income disparities as money flows to the top, and low-paid workers see their salaries stagnate.

While this study does not look at pension investments, most of their finding can be applied to the UC retirement situation, and the central lesson is that there needs to be more faculty and employee oversight over risky investment strategies that cater to the interests of wealthy trustees and regents. As the stock market continues its rollercoaster ride, universities are motivated to seek out high-risk investments in order to make up for past losses; this is truly a recipe for disaster.

New Salary Data Released by the UC:

2010-06-04T10:13:00.000-07:00

Using Jeffrey Bergamini’s excellent compensation database, we can examine salary information just released by the UC system. Between Jan. 1 2009 and Dec. 31 2009, the total number of employees listed as having regular employment (excluding graduate and undergraduate student workers and other casual employees) went down by 1,180, but the total gross pay for the system went up $257 million. If we include student employees and other “casual employees” into the mix, in 2009 we saw 3,822 fewer jobs. However, the number of people making over $200,000 went up by 200, and the 3,843 people making over 200K had a collective gross pay of $1.088 billion for an increase of $63 million over the previous year.

This initial reading of the compensation information tells us that during the UC “Budget fiscal crisis,” the university did reduce the number of low-wage employees, as well as cut their total compensation, while the number of high earners actually went up. This growing income inequality has now been coupled with a decrease in work for the lowest-paid employees. Moreover, the imposition of the furlough/salary reduction program did not reduce the total budget; instead it shifted wealth to the wealthiest.

The U.S. Department of Education Responds to Our Complaint

2010-06-02T08:33:00.001-07:00

Last summer, I wrote to the federal government to file a complaint regarding how the state of California was using federal stimulus dollars. My concern was that federal recovery money (ARRA) dedicated to higher education was being spent by the state for other purposes. Moreover, I argued that the state was failing to follow the federal mandate of protecting jobs.

On May 27th, I received the following response from the feds:
“This is in response to the complaint that you submitted to the U.S. Department of Education’s (Department) Office of the Inspector General’s Hotline on July 11, 2009. Your complaint indicated that California reduced its support for higher education upon receiving Federal stimulus funds. You further indicated that the University of California used the State’s reduction in support to justify a “fiscal emergency” that would “allow the UC President to impose furloughs, salary reductions, and layoffs.” The Department encourages public universities to use funds awarded under the State Fiscal Stabilization Fund (SFSF) program to avert layoffs and maintain essential educational services. We recognize that some States are reducing their support for education after receiving SFSF funds. Please be assured that the Department is thoroughly reviewing State financial data to ensure that each State meets the statutory maintenance-of-effort provisions. We will continue to monitor California’s support for education to ensure that the State is complying with those provisions. While we appreciate the concerns that you have expressed, the information you provided does not indicate any violation of the applicable statutory requirements.”

I guess I should be happy that I got a response to my inquiry, but the larger question remains of what the state and the UC did with the ARRA money. It still remains unclear how much ARRA money actually made it to the campuses, and I have asked the state auditor to follow the money trail. To be continued . . .

The $23 Billion Question

2010-05-25T07:09:00.000-07:00

Throughout this academic year, I have been arguing that while the state may have cut the UC’s total $20 billion budget by $600 million in the last two years, the university lost over $23 billion in its investment portfolio during the same time period. In fact, there has been a huge outcry over the reduction of state funds, but no one has questioned UC’s investment losses. It appears that people assume that since everyone lost money during the global fiscal meltdown, we cannot hold the university responsible for its investment decisions. However, a new study concerning the pension losses at six New England universities should make us re-open the question of how the UC lost so much money.

According to a new report by the Tellus Institute, Harvard, Dartmouth, MIT, Boston College, Boston University and Brandeis University all embarked on a high risk investment strategy that has now resulted in reduced endowments, budget cuts, delayed construction projects, and job eliminations. Like the UC, these universities all followed Yale University's investment chief, David Swensen’s endowment model of relying on alternative assets such as commodities, real estate and private equity.

While this report only looks at the six New England schools, its findings can also be applied to many universities, including the University of California. As I have written, the UC also copied Swensen’s strategy of moving money from stable securities to high return areas. In fact, the UC is still following this advice, which is evident in the following statement from Moody’s regarding the university’s investments: ““The long-term targets for the endowment pool would bring alternative assets (including hedge funds, real estate and private equity) to 35% of the total, with domestic and international equity accounting for another 45% of total assets.” Instead of shying away from the high-risk Yale investment model, the UC is increasing its exposure to these volatile assets.

Like the UC, one of the driving forces behind these risky investments is the role of trustees or regents with conflicting business interests. According to a Bloomberg Businessweek article ,“The investment committee at Dartmouth, in Hanover, New Hampshire, included more than six trustees whose firms oversaw more than $100 million in investments for its fund over the last five years, the report said. Stephen Mandel, who is relinquishing his post as chairman of the school’s investment committee to lead the board later this year, originally managed $10 million for the school at his firm Lone Pine Capital LLC. . . . Other trustees who manage money for Dartmouth include Leon Black, with at least $40 million in his private-equity firm Apollo Global Management LLC, and William Helman, a partner at venture capital company Greylock Partners, the report said. Helman, who will take over the committee’s helm from Mandel, has received $10 million from the endowment.” These types of conflict of interest are evident in the UC system since many of the regents have major holdings in private equity, real estate, and construction.

As the UC union coalition told state senator Darrell Steinberg during Charlene Zettel’s conformation to be the next UC regent, we need to have employees on the pension board to make sure that the university’s investment decisions are not guided by the personal business interests of individual regents. Moreover, we need a full investigation into how the UC lost $23 billion during the global fiscal meltdown.

We Can Make a Difference: UCLA Fights Back!

2010-05-18T08:22:00.000-07:00

As we come to the end of this academic year, it is important to look back at some of the accomplishments of the student-faculty-union movement in the UC system. Since I am most familiar with the UCLA situation, I want to highlight some of our recent success, and what we might want to do in the future.

First of all, it is clear that our protests have had a profound effect not only in California but around the world. According to the governor’s chief of staff, it was the protests at UCLA during the November regents meeting that persuaded him to increase the funding for higher education. These protests were covered all over the globe, and many students have written to us saying that our actions helped to motivate them to get involved in fighting their own systems.

One of the targets of the UCLA actions was to reverse the layoffs of 67 continuing appointment lecturers at the College of Arts and Sciences. After several protests, union grievances, and private negotiations, all of these lecturers have been rehired. This means that many classes will not be cancelled next year, and students will be able to get the courses they need to graduate in a timely fashion.

Another important victory is that our coalition of students, faculty, and unions helped to put together a slate of graduate students to run for student government, and all of our candidates won. The new Public Education Party (PEP) will be a strong advocate for access, affordability, and quality at UCLA. In fact, the new GSA president has been an active participant in our protests, and he has used his legal expertise to make sure that students were protected during our actions.

While our protests did not result in stopping the fee increases, we are confident that we can build on our other successes to push for a freezing of fee increases next year. We also intend to keep the pressure on the university to increase student diversity and to provide funding for undocumented students.

In order to help shape our agenda for next year, we held an open Alternative Commission on the Future of the University at UCLA. One of the results of this meeting was to formulate a new vision for a more democratic university. We plan to continue to work on our vision and present it to the public. So far, we have concentrated on asking students if they endorse the Commission’s recommendations to move classes online and to create three-year degrees. We have also surveyed students to see what they think about multi-year fee increases, accepting more out-of-state students, differential fees, and eliminating majors. We hope to continue these research efforts and report our findings in the future.

Perhaps the biggest lesson of the year is that people can make a difference, and it is important to fight for the system you want. Please join us this week at the regents meeting in San Francisco as we make our voices heard again.

Here’s The Future: A Virtual University of California

2010-05-13T07:07:00.000-07:00

A recent Chronicle of Higher Education article, “U. of California Considers Online Classes, or Even Degrees: Proposal for virtual courses challenges beliefs about what an elite university is—and isn't,” outlines the first real effect of the Commission on the Future of the University. According to the Chronicle, “Administrators hope the online plan will ultimately expand revenue and access for students at the same time. But the plan starts with a relatively modest experiment that aims to create online versions of roughly 25 high-demand lower-level "gateway courses." A preliminary list includes such staples as Calculus 1 and Freshman Composition.” In its effort to downsize undergraduate education, and hopefully turn a profit, the university hopes to place high-demand courses online.

While the initial project appears to be modest, this is only the first step: “UC hopes to put out a request for proposals in the fall, says Daniel Greenstein, vice provost for academic planning, programs, and coordination. Professors will compete for grants to build the classes, deliver them to students, and participate in evaluating them. Courses might be taught as soon as 2011.” In other words, faculty will be motivated to sacrifice the future of their own departments in the quest of landing a grant to re-design their classes for the Web. In fact, the UC plans to offer a great deal of cash for faculty willing to enter the digital future: “The university plans to spend about $250,000 on each course. It hopes to raise the money from external sources like foundations or major donors.” One has to wonder why the university does not simply use the $6 million it plans to raise on funding existing programs; moreover, we have to examine what kind of deals does the UC plan to offer private and corporate sponsors of these new programs. Will Apple be able to fund a new iCourse, which would require students to purchase Apple products?

We also have to question what the turn to online education will do to the quality of instruction and the reputation of the UC system. As the Chronicle article reports, most elite universities have not pursued online courses because they are afraid of losing their elite status. After all, what differentiates the University of California from the University of Phoenix is the fact that in the UC system, students are brought to the same place to study with expert faculty and researchers. Furthermore, once courses are moved online, the value of a UC degree will be downgraded.

As someone whose specialization is the use of new media for the teaching of writing, I can attest that online writing courses actually increase the amount of work for the faculty. Also, due to the high cost of technology, staffing, equipment, and facilities, these programs end up costing a huge amount of money. Moreover, online education casualizes the academic labor force as it hurts student retention rates.

None of these factors seem to affect Berkeley’s Law School dean Christopher Edley Jr. who argues that, “"Somebody is going to figure out how to deliver online education for credit and for degrees in the quality sector—i.e., in the elite sector. . . I think it ought to be us—not MIT, not Columbia, not Caltech, certainly not Stanford." Perhaps Edley should spend some time pondering why the other elite institutions are not going down this path; however, he seems intent on forcing online education down the throats of resisting faculty and students.

In a very telling moment in the Chronicle article, we find the following passage: “Building a collection of online classes could help alleviate bottlenecks and speed up students' paths to graduation. But supporters hope to use the pilot program to persuade faculty members to back a far-reaching expansion of online instruction that would offer associate degrees entirely online, and, ultimately, a bachelor's degree.” We can read this statement as positing that the grants will offer faculty a large amount of money to design their classes for the Web, and once the faculty have bought into this process, the move will be to transfer as much of the instruction online as possible. Let’s hope the UC faculty resist these bribes—I mean grants.

Alternative Commission on the Future of the University at UCLA

2010-05-03T07:13:00.001-07:00

On May 4th from 5-7 at Humanities 135, faculty, workers, and students will meet together for a public forum to discuss an alternative Commission for the Future of the University. The first hour will consist of presentations outlining specific recommendations, while the second hour will revolve around a democratic selection of the top suggestions. After this meeting, we will present our recommendations to the media and the Office of the President.

The central topics will be enrollment targets, student fees, online education, pension contributions, graduate education, diversity goals, summer instruction, language requirements, budget planning, and funding models.

Speakers will include members from the newly elected Graduate Student Association government, Toby Higbie (History, UCSB), Katherine King (Comparative Literature), Bob Samuels (UC-AFT), Teresa Avendado (AFSCME), Ali Cruz (Law Student), Holly Craig-Wehrle (Undergrad), and a representative of UPTE.

For a discussion of the commission's recommendations, click here and for UC-AFT alternative proposals, click here.

Please come and add your voice to the democratization of the university.