When UC President Mark Yudof was asked during a press conference why the UC can lend $200 million to the state but has to cut the salaries of its own employees, he gave a very telling response. He said that the university will be making money by lending cash to the state, but if it just paid salaries, the money would be gone. In other words, from his perspective, an activity that does not generate a profit is a waste of funds. So we must ask, how does instruction fit into this profit-driven framework?
Recent actions have made it clear that if instructional programs cannot show themselves to be profitable, they will be downsized or eliminated. For instance, at UCLA, we have been told that writing and language courses may need to be moved to either summer, extension, or online because they do not generate their own revenue. Of course, these programs do teach a large number of students at a relatively low cost since they rely mostly on less expensive non-tenured faculty for the majority of their courses. Yet, since required courses are not tied directly to external grants or auxiliary services, the teaching-heavy programs have to go. One idea from management is to wring some revenue out of these courses by requiring students to take them but offering the courses only in the summer—thus gathering more student fees for summer session. Moreover, like the extension programs, summer session is not only a revenue generating sector, but it also is allowed to hire faculty without having to worry about expenses like salary increases or benefits.
This move to push students to the privatized sectors of the university mirrors the idea that the revenue-generating faculty should not be part of the furlough system. For instance, faculty and researchers funded out of external grants will not be getting a pay cut, and the most highly paid faculty in the UC system, the medical professors, will be excluded from the furlough/salary reduction program. What is being set up here is a divided university, where one part receives special support because it brings in more money, while the other part is reduced and furloughed because it does not generate its own revenue. In this incredible splitting of higher education, instruction is cast as a waste of time and money.
Yet, this notion that the teaching-heavy programs in the humanities and social sciences do not generate revenue is a myth. In fact, the high-enrollment, low-cost courses in the humanities generate a huge profit that often gets siphoned off by the supposedly profit-making sectors. Large general education and introductory courses taught through departments in the humanities teach many students from the sciences and other fields outside of the humanities. Furthermore, required writing and foreign language courses generate student credit hours for the whole university, but these programs are usually funded entirely out of the humanities’ budget. While these courses in the humanities may not be tied to external grants and other profit-making sectors, they do produce a large percentage of student credit hours, and thus they bring in money through student fees and state funding. Courses in the humanities also accomplish the core mission of educating undergraduate students. From Yudof’s perspective, however, it is not enough to just teach students; programs and faculty have to show that they are profit-making entrepreneurs.
The university, therefore, is at a crossroads: it has to decide whether it still wants to fund undergraduate education, or shift as much money as possible into profit-generating activities. Of course, this is a false choice, since what is really going on is that the state and the students are subsidizing the profitable sectors. What we really need is a transparent and fair budgetary system that is coupled with a clear commitment to balancing instruction and research. We also need to rededicate ourselves to the idea that we are all part of a single system and we must all share in the profits and the costs of being part of this educational community. One solution would be a simple tax on all programs and units to be used to support the core missions of the university. Another needed reform would be to fund shared programs and required courses, like writing, foreign languages, and general education, through the chancellor’s office. If we do not make these changes now, all non-profitable programs will be placed in the position of UCLA, which is considering suspending all undergraduate requirements.
Bob Samuels
Monday, August 31, 2009
Monday, August 24, 2009
Mark Yudof and the Measure of Worth
In recent weeks, University of California President Mark Yudof has been questioned for handing out executive raises, while most other employees in the UC system will have their salaries decreased. Yudof’s main response to this criticism is to state that the university needs to retain its best people, and if the UC does not offer its top administrators competitive pay, they will take better offers. This defense then represents several hidden assumptions: 1) only high level administrators are worthy of retention efforts; 2) the vast majority of employees are not as valuable as the top executives; 3) everyone should sacrifice except for the highest paid employees; 4) the highest paid employees have no loyalty to the UC system and are always on the look out for a better deal; and 5) the UC is being held hostage to people who are constantly threatening to leave.
If we look deeper into these hidden assumptions, we see how the university has followed Wall Street’s lead, and that no matter how badly top executives perform or how badly the financial institution is doing, the highest earners will be rewarded with increased compensation (see below for a list of recent increases). Moreover, since all the other workers in the UC system are actually getting pay cuts, it must mean that the pay for the wealthiest is being subsidized by everyone else. The UC’s compensation structure then reflects the general movement of the U.S. economy: the rich get richer, the poor get poorer, and the middle-class gets left with nothing. However, this economic system is not the result of some inevitable set of laws; instead, each economic structure is determined by priorities and choices.
In his short time at UC, Yudof has made it clear that his priority is to support the “top people,” but who exactly are these leaders, and are they really worthy of their compensation? To answer this question, let us first look at Yudof himself. Since one of his main tasks is to make sure the university remains financially able to perform its core mission, how is he doing on this task? For example, has he done a good job working with the state to ensure that the UC budget remains intact? As far as I can tell, he has completely failed on this account, and while he has criticized the state for reducing the university’s funding, it seems that he has done little to prevent this budget loss. After all, he unveiled his “fiscal emergency” and furlough plan months before the state budget was resolved, and this move showed that the UC had accepted the cut before it was enacted. Furthermore, there has been no mention of him trying to make a deal with the governor or some plan about future funding. In fact, Yudof is already going around the state telling people that the budget will be worse next year. So on his interactions with the state, I would give him an F.
Now let’s look at the UC’s general finances, and here things appear to be more mixed. In terms of the overall revenue brought in by the university, this year appears to be a winner because the total operating budget has gone up. Thus, even though Yudof has declared a fiscal emergency, the university as a whole is in relative good shape and external sources for funding have gone up. However, his leadership must be called into question on this front because he does not seem to understand how the UC operating budget works. For example, he first tried to reduce the pay of employees funded out of external grants, and then he said, the university could not do this. Moreover, he started out the furlough plan by announcing that all pay would be reduced, but he later reversed course, and said that for many top earners, only some of the pay would be reduced. He also has claimed that the furlough plan would save $180 million, but in reality the number is closer to $600 million. When he was confronted with this discrepancy, he simply said that most of the savings would be returned to the units. In other words, the salary savings plan is actually a salary redistribution plan, and no one knows how this money will be allocated.
Perhaps Yudof’s biggest problem area in relation to UC’s internal budget is the way he constantly repeats that certain funds are legally restricted. Although it has been pointed out that on the university’s own audited financial forms, 70% of the UC revenue is unrestricted, Yudof has said that it would be illegal for the university to use money from external sources in order to help supplement the loss of state funds. After all, who is paying for all of the executive raises? It turns out that most external grants that are awarded to the university require the payment of indirect costs to the school, and this money goes to very general things like central administration, general utility costs, staff, and facilities. There is therefore no direct relation between the specific costs of a particular grant and the specific expenses of the university. For example, if a professor gets a $100,000 grant to develop a laser technology from the federal government, an additional $50,000 is then given to the university to pay for overhead, there is no law requiring that most of that $50,000 is spent on anything directly associated to the project; instead a general rate is applied to the grant and money gets redistributed in a very mysterious way. In fact, all of the grant money goes to the Office of the President, and UCOP skims off a certain amount before it is sent back to the campuses. Therefore, while it looks like the money coming in from external grants is dedicated to very specific projects, much of it is very flexible. Yudof then is not telling the truth when he says that this money is all restricted by law.
This same question of restricted funds relates to all of the revenue-generating sectors of the UC system. For instance, the medical centers clear hundreds of millions of dollars of profit each year, but Yudof claims that this money cannot be used to make up for the loss of general funds. However, this is exactly what the UC did in 1993, and there is no law preventing the university to do it again. In fact, Yudof’s furlough plan is reducing the salaries of many of the people employed in the medical field, so it appears to be highly contradictory for him to insist that they cannot do it. It is also strange that these medical centers have declared that they have no financial relation to the university, but they use the university’s name and pension plan to attract workers and patients. These centers also hide behind the university to maintain their non-profit status, and this brings us to the question of what they do with their annual profits. It seems that in order to remain not-for-profit, the medical centers have to funnel most of their extra money back into pay and construction, and this is one reason why the compensation for the medical faculty is so high. Furthermore, due to their wealth, which translates into power in the UC system, the medical professors and administrators have successfully petitioned Yudof to not cut their extra compensation.
The medical centers combined with extension, summer programs, and housing and parking make up over 40% of the UC operating budget, and all of these sectors profit from the UC name and often share faculty, buildings, and administration with the general campus. There is thus no reason why these revenue-generating units cannot come up with funds to make up for the loss of state support. There is also no reason why the employees in these units should not have participated in the general furlough plan, and it seems that the only reason they have been spared is that the university considers money-making centers to be worthy of protection, but activities like teaching students must be cut.
The next biggest area of contention is the endowment, which does have some restrictions placed on it, but many of these restrictions are vague and the non vague ones usually direct the money to fund aspects of the general fund. For instance, many gifts are dedicated to funding financial aid, undergraduate education, or specific departments. Moreover, it seems strange that Yudof says he cannot spend this endowment money because it is restricted, but the university can invest it and lose it.
This question of investments brings us to the final part of the UC budget, which shows Yudof at his worse. It is important to note that at the same time, Yudof was claiming that the state budget reduction of $812 would cause a fiscal emergency, the UC lost $23 billion in its investment funds. While we cannot blame Yudof for losing this money, we can blame him for not dealing with these losses or even mentioning them in public. Instead, he used the state reduction to focus all attention on an external enemy as he deflected attention away from the real source of UC’s problems, which is the handling of its own money. While many institutions lost a lot of money during the global financial meltdown, UC’s pension and endowment investments have been underperforming ever since their management began to be outsourced in 2000. By hiring external money managers, the UC not only increased the cost of doing business, but it also ended up investing in highly risky financial instruments. The UC, under the leadership of regent chair and investment banker Richard Blum, also picked the worse time to transfer money from relatively stable bonds to real estate, and due in part to this change in its investment strategies, the regents and the president have gambled away the future financial health of the university.
Since the UC lost so much money in its pension fund, it will be forced to require substantial employee and employer contributions. Fundamentally, the increases in employee contributions will represent a permanent pay cut for the workers, while the need for the university to fund the pension plan will create a permanent fiscal crisis for the university unless something major is done on this front. Unfortunately, Yudof has not talked about the UC’s pension losses, and so no one knows about the true fiscal problem facing the university. What Yudof and others have also failed to discuss is the fact that by constantly giving the “market worthy” people higher salaries and special retirement deals, the pension problem only gets worse.
The solutions to the UC’s financial difficulties will have to do with reining in compensation, sharing revenue between units, establishing budgetary transparency, expanding the number of mid-level earners (so they can pay into the pension plan), and re-establishing education as a priority. Since Yudof has not shown himself to be interested in any of these tasks, I say to him: You are not worthy.
Bob Samuels, UC-AFT
For a list of Executive Deals Approved of during the Fiscal Emergency, see
http://www.upte.org/about/press/2009-07-23.pdf
If we look deeper into these hidden assumptions, we see how the university has followed Wall Street’s lead, and that no matter how badly top executives perform or how badly the financial institution is doing, the highest earners will be rewarded with increased compensation (see below for a list of recent increases). Moreover, since all the other workers in the UC system are actually getting pay cuts, it must mean that the pay for the wealthiest is being subsidized by everyone else. The UC’s compensation structure then reflects the general movement of the U.S. economy: the rich get richer, the poor get poorer, and the middle-class gets left with nothing. However, this economic system is not the result of some inevitable set of laws; instead, each economic structure is determined by priorities and choices.
In his short time at UC, Yudof has made it clear that his priority is to support the “top people,” but who exactly are these leaders, and are they really worthy of their compensation? To answer this question, let us first look at Yudof himself. Since one of his main tasks is to make sure the university remains financially able to perform its core mission, how is he doing on this task? For example, has he done a good job working with the state to ensure that the UC budget remains intact? As far as I can tell, he has completely failed on this account, and while he has criticized the state for reducing the university’s funding, it seems that he has done little to prevent this budget loss. After all, he unveiled his “fiscal emergency” and furlough plan months before the state budget was resolved, and this move showed that the UC had accepted the cut before it was enacted. Furthermore, there has been no mention of him trying to make a deal with the governor or some plan about future funding. In fact, Yudof is already going around the state telling people that the budget will be worse next year. So on his interactions with the state, I would give him an F.
Now let’s look at the UC’s general finances, and here things appear to be more mixed. In terms of the overall revenue brought in by the university, this year appears to be a winner because the total operating budget has gone up. Thus, even though Yudof has declared a fiscal emergency, the university as a whole is in relative good shape and external sources for funding have gone up. However, his leadership must be called into question on this front because he does not seem to understand how the UC operating budget works. For example, he first tried to reduce the pay of employees funded out of external grants, and then he said, the university could not do this. Moreover, he started out the furlough plan by announcing that all pay would be reduced, but he later reversed course, and said that for many top earners, only some of the pay would be reduced. He also has claimed that the furlough plan would save $180 million, but in reality the number is closer to $600 million. When he was confronted with this discrepancy, he simply said that most of the savings would be returned to the units. In other words, the salary savings plan is actually a salary redistribution plan, and no one knows how this money will be allocated.
Perhaps Yudof’s biggest problem area in relation to UC’s internal budget is the way he constantly repeats that certain funds are legally restricted. Although it has been pointed out that on the university’s own audited financial forms, 70% of the UC revenue is unrestricted, Yudof has said that it would be illegal for the university to use money from external sources in order to help supplement the loss of state funds. After all, who is paying for all of the executive raises? It turns out that most external grants that are awarded to the university require the payment of indirect costs to the school, and this money goes to very general things like central administration, general utility costs, staff, and facilities. There is therefore no direct relation between the specific costs of a particular grant and the specific expenses of the university. For example, if a professor gets a $100,000 grant to develop a laser technology from the federal government, an additional $50,000 is then given to the university to pay for overhead, there is no law requiring that most of that $50,000 is spent on anything directly associated to the project; instead a general rate is applied to the grant and money gets redistributed in a very mysterious way. In fact, all of the grant money goes to the Office of the President, and UCOP skims off a certain amount before it is sent back to the campuses. Therefore, while it looks like the money coming in from external grants is dedicated to very specific projects, much of it is very flexible. Yudof then is not telling the truth when he says that this money is all restricted by law.
This same question of restricted funds relates to all of the revenue-generating sectors of the UC system. For instance, the medical centers clear hundreds of millions of dollars of profit each year, but Yudof claims that this money cannot be used to make up for the loss of general funds. However, this is exactly what the UC did in 1993, and there is no law preventing the university to do it again. In fact, Yudof’s furlough plan is reducing the salaries of many of the people employed in the medical field, so it appears to be highly contradictory for him to insist that they cannot do it. It is also strange that these medical centers have declared that they have no financial relation to the university, but they use the university’s name and pension plan to attract workers and patients. These centers also hide behind the university to maintain their non-profit status, and this brings us to the question of what they do with their annual profits. It seems that in order to remain not-for-profit, the medical centers have to funnel most of their extra money back into pay and construction, and this is one reason why the compensation for the medical faculty is so high. Furthermore, due to their wealth, which translates into power in the UC system, the medical professors and administrators have successfully petitioned Yudof to not cut their extra compensation.
The medical centers combined with extension, summer programs, and housing and parking make up over 40% of the UC operating budget, and all of these sectors profit from the UC name and often share faculty, buildings, and administration with the general campus. There is thus no reason why these revenue-generating units cannot come up with funds to make up for the loss of state support. There is also no reason why the employees in these units should not have participated in the general furlough plan, and it seems that the only reason they have been spared is that the university considers money-making centers to be worthy of protection, but activities like teaching students must be cut.
The next biggest area of contention is the endowment, which does have some restrictions placed on it, but many of these restrictions are vague and the non vague ones usually direct the money to fund aspects of the general fund. For instance, many gifts are dedicated to funding financial aid, undergraduate education, or specific departments. Moreover, it seems strange that Yudof says he cannot spend this endowment money because it is restricted, but the university can invest it and lose it.
This question of investments brings us to the final part of the UC budget, which shows Yudof at his worse. It is important to note that at the same time, Yudof was claiming that the state budget reduction of $812 would cause a fiscal emergency, the UC lost $23 billion in its investment funds. While we cannot blame Yudof for losing this money, we can blame him for not dealing with these losses or even mentioning them in public. Instead, he used the state reduction to focus all attention on an external enemy as he deflected attention away from the real source of UC’s problems, which is the handling of its own money. While many institutions lost a lot of money during the global financial meltdown, UC’s pension and endowment investments have been underperforming ever since their management began to be outsourced in 2000. By hiring external money managers, the UC not only increased the cost of doing business, but it also ended up investing in highly risky financial instruments. The UC, under the leadership of regent chair and investment banker Richard Blum, also picked the worse time to transfer money from relatively stable bonds to real estate, and due in part to this change in its investment strategies, the regents and the president have gambled away the future financial health of the university.
Since the UC lost so much money in its pension fund, it will be forced to require substantial employee and employer contributions. Fundamentally, the increases in employee contributions will represent a permanent pay cut for the workers, while the need for the university to fund the pension plan will create a permanent fiscal crisis for the university unless something major is done on this front. Unfortunately, Yudof has not talked about the UC’s pension losses, and so no one knows about the true fiscal problem facing the university. What Yudof and others have also failed to discuss is the fact that by constantly giving the “market worthy” people higher salaries and special retirement deals, the pension problem only gets worse.
The solutions to the UC’s financial difficulties will have to do with reining in compensation, sharing revenue between units, establishing budgetary transparency, expanding the number of mid-level earners (so they can pay into the pension plan), and re-establishing education as a priority. Since Yudof has not shown himself to be interested in any of these tasks, I say to him: You are not worthy.
Bob Samuels, UC-AFT
For a list of Executive Deals Approved of during the Fiscal Emergency, see
http://www.upte.org/about/press/2009-07-23.pdf
Friday, August 21, 2009
The UC Need for Lecturers
Using the most comprehensive and recent data on courses taught in the UC system (http://www.ucop.edu/planning/fia/documents/fia_annlrpt2007.pdf), we can gain a better understanding of how dependent the UC is on non-tenured faculty for undergraduate education. According to the standard UC course counting method, which has since been revised, we find four main groups of faculty: 1) Regular Rank, 2) Visitors and Adjuncts, 3) Lecturers, and 4) Senate Lecturers.
Looking at the number of senate faculty in 2004-05, there were 6,161 fte teaching an average of 4.9 primary courses a year (semester campuses are adjusted to fit this structure). In the 30,088 senate classes, there was a total of 1,126,183 students, and if you multiply the number of students by the number of credit hours, you get 4,253,811, which translates into 690 credit units per faculty fte.
If we now look at the lecturers, we find that during the same time period, there were 1,439 fte who taught a total of 13,335 primary courses with 543,371 enrollments. The average number of classes taught per lecturer fte was 9.3 (which is above the contractual limit). Lecturers taught 2,050,570 credit hours for an average of 1,425 credit hours per lecturer fte. This final number is shocking when you figure that the senate average is less than half, which means lecturers teach on average much larger classes with higher unit credits.
The other two categories of faculty are much smaller. For instance, there were only 105 fte Senate lecturers and 298 visiting and adjunct FTE. The lecturers with security of employment taught 860 courses and the adjuncts and visitors combined taught 1,216 courses.
The first thing we should notice is that graduate students are not listed in these groupings, which is amazing since graduate students teach thousands of classes in the UC system. Either the university is just not reporting on the classes graduate student teach, or UC is giving credit to other people for the courses taught by graduate students. In fact, we know that senate faculty are often listed as the teachers of record for courses that are taught by graduate students, and this says nothing about the thousands of course sections taught by graduate students. It is also unclear who falls under the category of Visitors and Adjuncts because non-tenure-track faculty who are primarily instructors are supposed to be in the lecturer's unit. While there are some true visiting faculty, in the past, we found that many visiting faculty were visiting from nowhere and that they should actually be called lecturers.
According to this same report, senate faculty teach 48% of the undergraduate courses, while lecturers teach 28%. However, a more important statistic should be the number of students multiplied by the number of credit units. We do not have these figures, but we can determine that since half of the courses taught by senate faculty are graduate courses, and only 7% of the courses taught by lecturers are graduate courses that lecturers are teaching more than 50% of the total undergraduate student credit hours, and this statistic does not take into account all of the graduate courses that are being credited to senate faculty.
The use of lecturers and graduate student instructors in the UC system is a hidden secret that needs to be exposed. Essentially, by not accounting for graduate student instructors, the UC has been misreporting its classroom activity to the state and the federal government. Unfortunately, things have only gotten worse because in an effort to give credit for non-primary classes, the UC has decided to count in the new course counting method, all of the individual and independent studies that were not considered courses in the past. While faculty should get credit for this work, the new way of counting these courses distorts all of the UC statistics.
Looking at the number of senate faculty in 2004-05, there were 6,161 fte teaching an average of 4.9 primary courses a year (semester campuses are adjusted to fit this structure). In the 30,088 senate classes, there was a total of 1,126,183 students, and if you multiply the number of students by the number of credit hours, you get 4,253,811, which translates into 690 credit units per faculty fte.
If we now look at the lecturers, we find that during the same time period, there were 1,439 fte who taught a total of 13,335 primary courses with 543,371 enrollments. The average number of classes taught per lecturer fte was 9.3 (which is above the contractual limit). Lecturers taught 2,050,570 credit hours for an average of 1,425 credit hours per lecturer fte. This final number is shocking when you figure that the senate average is less than half, which means lecturers teach on average much larger classes with higher unit credits.
The other two categories of faculty are much smaller. For instance, there were only 105 fte Senate lecturers and 298 visiting and adjunct FTE. The lecturers with security of employment taught 860 courses and the adjuncts and visitors combined taught 1,216 courses.
The first thing we should notice is that graduate students are not listed in these groupings, which is amazing since graduate students teach thousands of classes in the UC system. Either the university is just not reporting on the classes graduate student teach, or UC is giving credit to other people for the courses taught by graduate students. In fact, we know that senate faculty are often listed as the teachers of record for courses that are taught by graduate students, and this says nothing about the thousands of course sections taught by graduate students. It is also unclear who falls under the category of Visitors and Adjuncts because non-tenure-track faculty who are primarily instructors are supposed to be in the lecturer's unit. While there are some true visiting faculty, in the past, we found that many visiting faculty were visiting from nowhere and that they should actually be called lecturers.
According to this same report, senate faculty teach 48% of the undergraduate courses, while lecturers teach 28%. However, a more important statistic should be the number of students multiplied by the number of credit units. We do not have these figures, but we can determine that since half of the courses taught by senate faculty are graduate courses, and only 7% of the courses taught by lecturers are graduate courses that lecturers are teaching more than 50% of the total undergraduate student credit hours, and this statistic does not take into account all of the graduate courses that are being credited to senate faculty.
The use of lecturers and graduate student instructors in the UC system is a hidden secret that needs to be exposed. Essentially, by not accounting for graduate student instructors, the UC has been misreporting its classroom activity to the state and the federal government. Unfortunately, things have only gotten worse because in an effort to give credit for non-primary classes, the UC has decided to count in the new course counting method, all of the individual and independent studies that were not considered courses in the past. While faculty should get credit for this work, the new way of counting these courses distorts all of the UC statistics.
Monday, August 17, 2009
Who are the High Earners in the UC System
Like many people, I was wondering about who exactly are the people making more than $200,000 a year in the UC system. Using Jeffrey Bergamini’s great salary data (http://ucpay.globl.org), I analyzed the different categories of employees in the over 200K club. I also looked at how these groups increased over the two-year period from 2006 to 2008. Here is what I found (with Jeffrey’s help):
First of all, I broke the employees making over $200,000 into six basic groups: 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, which had a total gross pay of over 1 billion dollars in 2008. The top group was the medical faculty, which had 2,296 people making a total of $680 million in 2008. This same group in 2006 had 1,748 employees with total earnings over $502 million. In other words, over a period of two years, the UC added 550 new people from the medical field into the over $200,000 club for an additional cost of $178 million (which is about the total savings for the entire furlough plan).
The second biggest group was the administrators. In 2008, there were 397 administrators in the over 200k club making a total of $109 million, and in 2006, the same group had 214 members for a collective gross pay of $58.8 million. This group and its collective salaries, then, almost doubled in just two years. If you want to know where the UC money has been going, this is a great place to start.
The third biggest group is the academic professors outside of law, medicine, and business. In 2008, there were 415 academic professors making over $2000,000 for a collective gross pay of $96.6 million. In 2006, this same group had 215 employees at $49 million. In other words, the number of academic professor’s outside of the professional schools making over $200,000 basically doubled in a two-year period. During this time, the faculty salaries in the UC system continued to fall beneath the national average, and so what we are seeing in the UC system is an incredible widening of faculty salary inequality: the rich are getting richer, and the poor are getting poorer.
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 2006, there were 193 in this group with a collective gross pay of $46 million. Once again the pay of this group doubled in two years: they do not call themselves business faculty for nothing.
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 2006, this same group consisted of 57 employees making a collective $13 million. For some reason, this group did not double its earnings, but it still showed a healthy increase.
The final group is the athletic coaches, which in 2008, there were 24 coaches making over $2000,000 for a collective payout of $12.8 million. In 2006, this same group had only 11 members with collective earning over $5 million. So athletic coaches in this category more than doubled their earnings in two years.
What all of these statistics tell us that that UC does not have a budget problem; it has an out-of-control compensation problem. Moreover, it is the people at the top, just 1.5% of the employees (out of a total of 240,000 workers) who make 11% of the total compensation, and this group increased its wealth by close to 40% in just two years. Did you get a 40% raise in the last two years?
Bob Samuels, UC-AFT
First of all, I broke the employees making over $200,000 into six basic groups: 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, which had a total gross pay of over 1 billion dollars in 2008. The top group was the medical faculty, which had 2,296 people making a total of $680 million in 2008. This same group in 2006 had 1,748 employees with total earnings over $502 million. In other words, over a period of two years, the UC added 550 new people from the medical field into the over $200,000 club for an additional cost of $178 million (which is about the total savings for the entire furlough plan).
The second biggest group was the administrators. In 2008, there were 397 administrators in the over 200k club making a total of $109 million, and in 2006, the same group had 214 members for a collective gross pay of $58.8 million. This group and its collective salaries, then, almost doubled in just two years. If you want to know where the UC money has been going, this is a great place to start.
The third biggest group is the academic professors outside of law, medicine, and business. In 2008, there were 415 academic professors making over $2000,000 for a collective gross pay of $96.6 million. In 2006, this same group had 215 employees at $49 million. In other words, the number of academic professor’s outside of the professional schools making over $200,000 basically doubled in a two-year period. During this time, the faculty salaries in the UC system continued to fall beneath the national average, and so what we are seeing in the UC system is an incredible widening of faculty salary inequality: the rich are getting richer, and the poor are getting poorer.
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 2006, there were 193 in this group with a collective gross pay of $46 million. Once again the pay of this group doubled in two years: they do not call themselves business faculty for nothing.
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 2006, this same group consisted of 57 employees making a collective $13 million. For some reason, this group did not double its earnings, but it still showed a healthy increase.
The final group is the athletic coaches, which in 2008, there were 24 coaches making over $2000,000 for a collective payout of $12.8 million. In 2006, this same group had only 11 members with collective earning over $5 million. So athletic coaches in this category more than doubled their earnings in two years.
What all of these statistics tell us that that UC does not have a budget problem; it has an out-of-control compensation problem. Moreover, it is the people at the top, just 1.5% of the employees (out of a total of 240,000 workers) who make 11% of the total compensation, and this group increased its wealth by close to 40% in just two years. Did you get a 40% raise in the last two years?
Bob Samuels, UC-AFT
Wednesday, August 12, 2009
Where does the UC Money Go?
Drawing from Jeffrey Bergamini’s excellent salary data (http://ucpay.globl.org/), we find the following:
In 2006, there were 2,464 employees earning over $200,000 with a total gross pay of $680 million and a total base pay of $331 million. By 2008, we find 3,643 employees earning over $200,000 with a total gross pay of 1 billion and base pay of $640 million. This means that in 2 years, the UC added 1,200 employees to the over $200,000 club, and these increases cost over $300 million. Also, if you look at the difference between gross pay and base pay, you will see that a lot of these people will only have part of their salaries reduced by the furlough plan.
Looking up the salary scale, the story of the UC transferring wealth from the poorest employees to the wealthiest becomes clearer. In 2006, there were 609 employees making over $300,000 with a total gross pay of $240 million and a base pay of $87 million. Then, two years later, in 2008, there were 977 employees making over $300,000 with a total gross pay of $390 million and base pay of $195 million. Once again, this group of high earners increases by 30%, and if these increases were not made, we would have roughly all of the money that the furlough plan will save.
Now let’s look at some of the highest earners. In 2006, there were 190 individuals making over $400,00 with a total gross pay of 98 million and a total base pay of 28 million. Then, in 2008, there were 293 high earners making over $400,000 with a total gross pay of $160 million and total base pay of $67 million. Once again, the top group increases by about 30% and the increase in gross pay is almost doubled. We should remember that during this period, many of the lowest paid workers received no salary increases, and so the main story here is that the poorest workers subsidize the wealth of the richest employees.
Bob Samuels, UC-AFT
In 2006, there were 2,464 employees earning over $200,000 with a total gross pay of $680 million and a total base pay of $331 million. By 2008, we find 3,643 employees earning over $200,000 with a total gross pay of 1 billion and base pay of $640 million. This means that in 2 years, the UC added 1,200 employees to the over $200,000 club, and these increases cost over $300 million. Also, if you look at the difference between gross pay and base pay, you will see that a lot of these people will only have part of their salaries reduced by the furlough plan.
Looking up the salary scale, the story of the UC transferring wealth from the poorest employees to the wealthiest becomes clearer. In 2006, there were 609 employees making over $300,000 with a total gross pay of $240 million and a base pay of $87 million. Then, two years later, in 2008, there were 977 employees making over $300,000 with a total gross pay of $390 million and base pay of $195 million. Once again, this group of high earners increases by 30%, and if these increases were not made, we would have roughly all of the money that the furlough plan will save.
Now let’s look at some of the highest earners. In 2006, there were 190 individuals making over $400,00 with a total gross pay of 98 million and a total base pay of 28 million. Then, in 2008, there were 293 high earners making over $400,000 with a total gross pay of $160 million and total base pay of $67 million. Once again, the top group increases by about 30% and the increase in gross pay is almost doubled. We should remember that during this period, many of the lowest paid workers received no salary increases, and so the main story here is that the poorest workers subsidize the wealth of the richest employees.
Bob Samuels, UC-AFT
Sunday, August 9, 2009
Refuting President Yudof’s Claims
In a recent press conference in Santa Barbara, the UC President Mark Yudof reiterated his claim that the UC does not have access to unrestricted funds. President Yudof insisted that almost all of UC’s $20 billion operating budget and its $50 billion investment portfolio is legally restricted. This post will provide evidence to disprove Yudof’s claim.
1) UC’s own audited financial statements declare that in 2008, $13.7 billion out of a total of $18 billion were listed under the category of unrestricted funds: (http://socrates.berkeley.edu/~schwrtz/FinU17.html). Either they are lying on their official financial statements, or they do not read their own reports.
2) In July 2009, Moody’s gave the UC a high bond rating because of the diversity of its assets and its large level of unrestricted funds (http://changinguniversities.blogspot.com/2009/07/ucs-high-bond-ratings.html). Once again, we have to ask if UC is misrepresenting its financial standing or does it have a high level of unrestricted funds. Furthermore, do to its high bond rating, the UC system was able to borrow and lend $200 million to the state of California (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/06/BAGK1942B2.DTL).
3) UC must have extra cash at hand because it continues to find money to raise executive compensation (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/06/MNSG194N2P.DTL).
4) UC has $4.6 billion in endowment funds and $7.2 billion in its short-term investment funds: (http://www.ucop.edu/treasurer/invinfo/COI_IAG_Perf_Summary_3-09.pdf)
Since UC has recently lost billions in these funds, it clearly has the ability to move this money around. Also, much of the UC endowment fund is supposed to be dedicated to the educational mission, and so this source of funding could be used to help make up for state reductions (http://changinguniversities.blogspot.com/2009/07/is-university-of-california-well.html).
5) A third of the UCs revenue stream comes from external grants, and the university usually charges an overhead rate of about 50% for each grant. While some of this money is earmarked for particular purposes, much of the money goes to shared university functions like facilities, administration, staff, libraries, and utilities (http://www.lao.ca.gov/2004/uc_fac_fclty/062304_uc_fac_res.pdf). The UC system could raise general funds by simply increasing the overhead rate or by sharing funds in a more equitable way.
It is clear that most of UCs money is unrestricted and can be used for any purpose the university wants to pursue. In fact, a legal fact-finding report found that the university has the money to pay its employees at a higher rate, but it just decides not to make this a priority (http://www.cueunion.org/bargaining/ffreport.php). UC does not have a budget crisis; it has a crisis in priorities.
1) UC’s own audited financial statements declare that in 2008, $13.7 billion out of a total of $18 billion were listed under the category of unrestricted funds: (http://socrates.berkeley.edu/~schwrtz/FinU17.html). Either they are lying on their official financial statements, or they do not read their own reports.
2) In July 2009, Moody’s gave the UC a high bond rating because of the diversity of its assets and its large level of unrestricted funds (http://changinguniversities.blogspot.com/2009/07/ucs-high-bond-ratings.html). Once again, we have to ask if UC is misrepresenting its financial standing or does it have a high level of unrestricted funds. Furthermore, do to its high bond rating, the UC system was able to borrow and lend $200 million to the state of California (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/06/BAGK1942B2.DTL).
3) UC must have extra cash at hand because it continues to find money to raise executive compensation (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/06/MNSG194N2P.DTL).
4) UC has $4.6 billion in endowment funds and $7.2 billion in its short-term investment funds: (http://www.ucop.edu/treasurer/invinfo/COI_IAG_Perf_Summary_3-09.pdf)
Since UC has recently lost billions in these funds, it clearly has the ability to move this money around. Also, much of the UC endowment fund is supposed to be dedicated to the educational mission, and so this source of funding could be used to help make up for state reductions (http://changinguniversities.blogspot.com/2009/07/is-university-of-california-well.html).
5) A third of the UCs revenue stream comes from external grants, and the university usually charges an overhead rate of about 50% for each grant. While some of this money is earmarked for particular purposes, much of the money goes to shared university functions like facilities, administration, staff, libraries, and utilities (http://www.lao.ca.gov/2004/uc_fac_fclty/062304_uc_fac_res.pdf). The UC system could raise general funds by simply increasing the overhead rate or by sharing funds in a more equitable way.
It is clear that most of UCs money is unrestricted and can be used for any purpose the university wants to pursue. In fact, a legal fact-finding report found that the university has the money to pay its employees at a higher rate, but it just decides not to make this a priority (http://www.cueunion.org/bargaining/ffreport.php). UC does not have a budget crisis; it has a crisis in priorities.
Thursday, August 6, 2009
The UCLA Restructuring Playbook
The document below helps to explain how UCLA is going about changing our program and other undergraduate programs. Some of the major considerations are reducing the total number of classes, reducing requirements, switching courses to summer and extension, increasing fees, and using technology to make big classes more effective. I will comment on all of this below.
“A time for reappraisal
(http://www.today.ucla.edu/portal/ut/worsening-state-budget-crisis-94283.aspx)
To streamline academic programs, departments will be reviewing requirements for majors and minors and reducing maximum units. General education requirements will be reviewed as well. The number of total courses will be reduced, but departments will need to make sure that undergraduates have the essential courses they need to make progress toward their degree, Waugh emphasized.
Departments will also increase the percentage of ladder faculty who are teaching high-priority courses. To become more efficient, departments will be consolidating similar basic skills courses, as well as administrative and computing services. And the use of educational technology will expand, if possible, to increase efficiency and sustain quality while class sizes increase.
In addition, task forces will form this summer to help specific academic areas — including foreign language departments and the writing programs — save money. "This is not aimed at creating cuts to the humanities," which will be most heavily impacted by the cuts in terms of cost of instruction, Waugh stressed. These task forces, made up of Senate members and administrators, will be working in a short timeframe, from 90 to 120 days.
To increase non-state revenue, there are a number of options being considered, Waugh said. Departments could offer more courses during summer sessions, set up self-supporting degree programs and work with UCLA Extension on ways to deliver basic skills courses. UCLA will gradually increase its enrollment of higher-paying non-resident students, but by a modest number so as not to harm access for California students. And UC is looking into whether different fees should be charged for particular schools or subjects where the cost of educating students is higher.”
From the initial budget task force charge: “
2) UCLA needs to consider alternative ways of providing instruction, especially in the areas of language, writing and math. Increased use of summer sessions,
partnerships with community colleges and extension, and new teaching technologies including online methods must be explored in order to lower the costs of delivering basic and remedial skills.”
Bob’s commentary: In efforts to save money, the budget task force will be recommending major changes to the undergraduate curriculum. Unfortunately, our program has no representation on the task force working to restructure us, and far as I know, no one from our program has even been informed that this task force exists (Bruce can correct me on this point).
One positive note is that they still want to move people through the system, and we do help this process, so they could use our relatively cheap production of student units. Also, a lot of these plans are contingent on senate faculty teaching more, and this may be hard to enact for an extended period of time.
On a more negative side, the idea of switching classes to summer and extension could really hurt us and cost students a lot of extra money. Moreover, the idea that using technology can make large classes seem small has been proven to be expensive and not necessarily effective.
“A time for reappraisal
(http://www.today.ucla.edu/portal/ut/worsening-state-budget-crisis-94283.aspx)
To streamline academic programs, departments will be reviewing requirements for majors and minors and reducing maximum units. General education requirements will be reviewed as well. The number of total courses will be reduced, but departments will need to make sure that undergraduates have the essential courses they need to make progress toward their degree, Waugh emphasized.
Departments will also increase the percentage of ladder faculty who are teaching high-priority courses. To become more efficient, departments will be consolidating similar basic skills courses, as well as administrative and computing services. And the use of educational technology will expand, if possible, to increase efficiency and sustain quality while class sizes increase.
In addition, task forces will form this summer to help specific academic areas — including foreign language departments and the writing programs — save money. "This is not aimed at creating cuts to the humanities," which will be most heavily impacted by the cuts in terms of cost of instruction, Waugh stressed. These task forces, made up of Senate members and administrators, will be working in a short timeframe, from 90 to 120 days.
To increase non-state revenue, there are a number of options being considered, Waugh said. Departments could offer more courses during summer sessions, set up self-supporting degree programs and work with UCLA Extension on ways to deliver basic skills courses. UCLA will gradually increase its enrollment of higher-paying non-resident students, but by a modest number so as not to harm access for California students. And UC is looking into whether different fees should be charged for particular schools or subjects where the cost of educating students is higher.”
From the initial budget task force charge: “
2) UCLA needs to consider alternative ways of providing instruction, especially in the areas of language, writing and math. Increased use of summer sessions,
partnerships with community colleges and extension, and new teaching technologies including online methods must be explored in order to lower the costs of delivering basic and remedial skills.”
Bob’s commentary: In efforts to save money, the budget task force will be recommending major changes to the undergraduate curriculum. Unfortunately, our program has no representation on the task force working to restructure us, and far as I know, no one from our program has even been informed that this task force exists (Bruce can correct me on this point).
One positive note is that they still want to move people through the system, and we do help this process, so they could use our relatively cheap production of student units. Also, a lot of these plans are contingent on senate faculty teaching more, and this may be hard to enact for an extended period of time.
On a more negative side, the idea of switching classes to summer and extension could really hurt us and cost students a lot of extra money. Moreover, the idea that using technology can make large classes seem small has been proven to be expensive and not necessarily effective.
Great New Salary Data
Check out this site: http://ucpay.globl.org/
You can look at anyone's salary or any group of employees in the UC and see how their compensation increased between 2006 and 2008. Here are some important findings: (The full article is at: http://utotherescue.blogspot.com/2009/08/we-sometimes-get-letters-addressed-to.html
"Employees making at least $100K
2006 total gross pay (14,654 employees): $2,286,581,129.06 (30.9% of total UC salary) (link)
2008 total gross pay (21,531 employees): $3,370,788,442.25 (37.4% of total UC salary) (link)
Dollar increase: $1.08 billion
Percentage personnel increase: 46.9%
Percentage dollar increase: 47.4%
Change in percentage of total UC salary: +6.5%
Employees making under $100K
2006 total gross pay (121,661 employees): $5,111,896,556.80 (69.1% of total UC salary) (link)
2008 total gross pay(129,018 employees): $5,631,676,479.14 (62.6% of total UC salary) (link)
Dollar increase: $520 million
Percentage personnel increase: 6.0%
Percentage dollar increase: 10.2%
Change in percentage of total UC salary: -6.5%
Note the trends:
1. In just this short span of time, the proportional amount spent on six figure salaries has increased at the same rate that the amount spent on everyone else has decreased.
2. UC apparently needed 47% more six figure earners, but only 6% more of everyone else. Quite interesting.
3. What happened during this time that merited a nearly 50% increase in salary spending for wealthy employees?
I think most would agree that these are alarming figures."
I hope you can turn your anger and knowledge into action
You can look at anyone's salary or any group of employees in the UC and see how their compensation increased between 2006 and 2008. Here are some important findings: (The full article is at: http://utotherescue.blogspot.com/2009/08/we-sometimes-get-letters-addressed-to.html
"Employees making at least $100K
2006 total gross pay (14,654 employees): $2,286,581,129.06 (30.9% of total UC salary) (link)
2008 total gross pay (21,531 employees): $3,370,788,442.25 (37.4% of total UC salary) (link)
Dollar increase: $1.08 billion
Percentage personnel increase: 46.9%
Percentage dollar increase: 47.4%
Change in percentage of total UC salary: +6.5%
Employees making under $100K
2006 total gross pay (121,661 employees): $5,111,896,556.80 (69.1% of total UC salary) (link)
2008 total gross pay(129,018 employees): $5,631,676,479.14 (62.6% of total UC salary) (link)
Dollar increase: $520 million
Percentage personnel increase: 6.0%
Percentage dollar increase: 10.2%
Change in percentage of total UC salary: -6.5%
Note the trends:
1. In just this short span of time, the proportional amount spent on six figure salaries has increased at the same rate that the amount spent on everyone else has decreased.
2. UC apparently needed 47% more six figure earners, but only 6% more of everyone else. Quite interesting.
3. What happened during this time that merited a nearly 50% increase in salary spending for wealthy employees?
I think most would agree that these are alarming figures."
I hope you can turn your anger and knowledge into action
Wednesday, August 5, 2009
Sample Editorial
The UC Students Will Suffer
The UC administration likes to claim that it cares about educating undergraduates, but recent actions reveal another set of priorities. As President Yudof has said on many occasions, it will be hard to look students in the eye next year because there will be fewer courses, larger classes, longer lines, and less faculty to teach the undergraduates. While Yudof makes it sound like these cuts are inevitable, we have to wonder if he is telling the truth.
The UC is still a very wealthy institution with some very highly compensated employees, and so the recent claim of a "fiscal emergency" has to be received with skepticism. Yes, the state has cut 812 million dollars from the budget, but this covers two years and only 3% of the total operating budget, which is $20 billion a year. The UC also has another $50 billion in assets and investments, and so we must ask, why is the university pretending to be poor?
The first reason why the UC administration likes to cry poverty is that it wants to force the state to give it more money, and a wealthy institution has a hard time asking for more funds when so many in the state are suffering. The UC also has to claim poverty in order to raise student fees and to make sure that the most highly compensated employees--coaches, administrators, and medical faculty--remain highly compensated.
In fact, a recent study of UC’s salary system reveals that 3,643 employees earned over $200,000 in 2008 for a total gross pay of over 1 billion dollars. Since the total payroll for the UC system is $9 billion for 240,000 employees , this means that less than 2% of the people make 11% of the total pay. Moreover, Preside Yudof has decided to not “tax” the total compensation of employees, and this change has tremendous ramifications. For instance, the people making over $200,000 have a collective base pay of $640 million, so by taxing them 10%, the university only saves 64 million, but if the total compensation was taxed, UC would save 100 million, which is close to 70% of what the university will get by reducing all employees. In this structure, the poorest employees end up subsidizing the high salaries of the wealthiest employees.
Ultimately, the UC suffers from a culture of selfish individualism, where separate groups and employees simply do not want to share their resources. Thus, the people funded on external grants have successfully fought to be excluded from Yudof's furlough plan, and the highest earners have made sure that only their base pay, and not their total pay, will be reduced. Likewise, research faculty have been quick to call for a reduction of the instructional budget, so that the "prestige" of the university can be maintained. Some faculty have even suggested closing the Merced, Riverside, and Santa Cruz campuses because these institutions focus on teaching and not research.
During the last thirty years, universities like the UC have diversified their assets and have become highly profitable research centers, which are subsidized by state and federal taxes. Thus, while states have reduced their over-all support for these institutions, other sources of revenue, including constant tuition increases, have more than made up for the deficits. Unfortunately, the UC administration has decided not to share the revenue from the most profitable units, and so they will be forced to layoff non-tenured faculty who teach over 40% of the undergraduate courses, and once these faculty are gone, students will be paying more and getting less. UCLA is even considering suspending all undergraduate requirements.
The UC does not have a budget crisis; it has a crisis in priorities.
Bob Samuels, President, UC-AFT
The UC administration likes to claim that it cares about educating undergraduates, but recent actions reveal another set of priorities. As President Yudof has said on many occasions, it will be hard to look students in the eye next year because there will be fewer courses, larger classes, longer lines, and less faculty to teach the undergraduates. While Yudof makes it sound like these cuts are inevitable, we have to wonder if he is telling the truth.
The UC is still a very wealthy institution with some very highly compensated employees, and so the recent claim of a "fiscal emergency" has to be received with skepticism. Yes, the state has cut 812 million dollars from the budget, but this covers two years and only 3% of the total operating budget, which is $20 billion a year. The UC also has another $50 billion in assets and investments, and so we must ask, why is the university pretending to be poor?
The first reason why the UC administration likes to cry poverty is that it wants to force the state to give it more money, and a wealthy institution has a hard time asking for more funds when so many in the state are suffering. The UC also has to claim poverty in order to raise student fees and to make sure that the most highly compensated employees--coaches, administrators, and medical faculty--remain highly compensated.
In fact, a recent study of UC’s salary system reveals that 3,643 employees earned over $200,000 in 2008 for a total gross pay of over 1 billion dollars. Since the total payroll for the UC system is $9 billion for 240,000 employees , this means that less than 2% of the people make 11% of the total pay. Moreover, Preside Yudof has decided to not “tax” the total compensation of employees, and this change has tremendous ramifications. For instance, the people making over $200,000 have a collective base pay of $640 million, so by taxing them 10%, the university only saves 64 million, but if the total compensation was taxed, UC would save 100 million, which is close to 70% of what the university will get by reducing all employees. In this structure, the poorest employees end up subsidizing the high salaries of the wealthiest employees.
Ultimately, the UC suffers from a culture of selfish individualism, where separate groups and employees simply do not want to share their resources. Thus, the people funded on external grants have successfully fought to be excluded from Yudof's furlough plan, and the highest earners have made sure that only their base pay, and not their total pay, will be reduced. Likewise, research faculty have been quick to call for a reduction of the instructional budget, so that the "prestige" of the university can be maintained. Some faculty have even suggested closing the Merced, Riverside, and Santa Cruz campuses because these institutions focus on teaching and not research.
During the last thirty years, universities like the UC have diversified their assets and have become highly profitable research centers, which are subsidized by state and federal taxes. Thus, while states have reduced their over-all support for these institutions, other sources of revenue, including constant tuition increases, have more than made up for the deficits. Unfortunately, the UC administration has decided not to share the revenue from the most profitable units, and so they will be forced to layoff non-tenured faculty who teach over 40% of the undergraduate courses, and once these faculty are gone, students will be paying more and getting less. UCLA is even considering suspending all undergraduate requirements.
The UC does not have a budget crisis; it has a crisis in priorities.
Bob Samuels, President, UC-AFT
Subscribe to:
Posts (Atom)