Friday, November 27, 2009

Proof that We Do Not Have to Raise Fees or Cut Programs

At the last regents meeting, President Yudof said that the state reduced UC’s funding by $1.2 billion during the last two years. It turns out that this figure hides the federal stimulus funds of $716 million and the 2009 state restoration of $164 million. This kind of false representation really upsets the state legislators who are trying to do what they can for the UC system. In fact, I interviewed two top California legislators last year, and they both said the same thing, which is how can the UC expect to get more money from the state, when all it does is attack the state in the media. These legislators are running for office and to have Yudof blame them for all of UC's problems does not help them.

For instance, Yudof has been going around saying that the state decided to stop funding the UC pension plan in 1990. The truth is that the regents voted to suspend contributions because the plan was over-funded, and now we are paying the price. One reason then why the state funding has stayed flat is that the UC told them to stop funding the pension plan, and now the UC is demanding that the state pay for the employer's contribution.

The UC stated on several occasions that their state funding was down in 2009 by several hundred million dollars, but if you download the UC’s latest financial statements and go to page 52, you will see that most of the revenue areas are up, especially funding from the state. 2009 was a record year in revenue, but Yudof called it a crisis and raised fees and cut programs.

Yudof has also been saying that the state support per student has been cut in half since 1990. This is not true; if you take the state appropriations for each year and divide it by the total number of students, you find that state support per student has gone up since 1990. Looking at the actual numbers (the sources are listed at the end of this post) we find that the per student state funding in 1990 was $13,690 (there were 156,000 students and the state gave the UC $2,135,733,000). In 2008-2009, the per student funding was $14,707 (221,00 students and the state funding was 3.2 billion).

I asked Patrick Lenz, the VP of budget about what formula of inflation the UC uses to determine the state’s student funding. He said he did now know, which I find concerning. I know that there is a higher education index that is twice the rate of inflation - this might be what UC is using. Almost every time Yudof speaks, he gives a different rate. Yudof also claims that the UC is over-enrolled by 11,000 students, but I can find no basis for this claim. In fact, UC has cut enrollment 2,300 students this year, and they plan to do the same next year.

For 2010, Yudof is claiming a $600 million cut, but there was also another part of the stimulus money ($76 million) that they never talk about. Also, UC reduced its enrollment by 2,3000 students in 2009, yet it claims that the state needs to fund an additional 11,000 enrollments. Meanwhile, the UC calculates that the enrollment reductions saves $32 million each year, and that the furlough has already saved $185 million and the restructuring of debt has saved $75 million. UCOP also calculates that the previous 2009 fee increase will bring in an additional $56 million, and the 32% increase will bring in $215 million. In other words, they have already made up for their loss of state funding, and this does not include savings due to layoffs and job reductions. The current target is to reduce instructional costs by $400 million, and in fact they have already saved over $100 million.

Our biggest fear is that they will continue to raise fees and cut instructional programs, while increasing the number and cost of administration. Another fear is that they will convince the UC students and faculty that all of the problems are due to the state. While we believe the state needs to restore full funding, it is absurd to blame the state for everything.

Please write a comment if you need more information or if you think some information is incorrect.

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

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  1. Actually the issue of funding for the pension plan is worse. UC has a standard factor that they multiply wages by to determine the benefits costs, this includes pensions. For grants it is 22%. When UC stopped making contributions to the pension fund, they did not decrease this factor. Yes that is correct, they continued to collect the money but just stopped putting it into the pension fund. I am positive this is the case for grant funded employees and fairly certain the same is true for state funded employees. Some of the money previously used for the pension fund probably offset increases in health benefits but I doubt that absorbed it all. Jelger

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