Tuesday, May 31, 2011

More Questions and Answers Regarding the UC Budget

One of the most surprising facts that have come out of my exchanges with the budget office of UCOP is that only 38% of the cost of instruction is spent on faculty salaries and benefits. Another interesting fact is that the university claims it spends almost the same amount of money on departmental support as it does on faculty salaries. Furthermore, in a new response to my questions regarding this data, I have been told that only 62.8% of state funds go to support general campus activities; in other words, 37.2% of state funds go to the health sciences, research, and public services.

While the UCOP budget office feels that I have unfairly called them non-transparent, they also freely admit that none of these calculations of the cost of instruction can be found on any of their web sites. They have also added that their budgeting methods are highly complex, and there is often no clear way of tracing how funds are actually spent. For example, in response to my inquiry into how much state funds go to support summer instruction, I got the following: “The amount of State funding dedicated to summer sessions is not easily determined due to the variety of funding arrangements both within and across the campuses and the fact that recent budget cuts have reduced significantly the amount of funding available for all of instruction.” I think this is an honest answer, but it shows how difficult it is for the university to have any type of real budget transparency.

This problem of following the money is evident in UCOP’s response to my question concerning the different costs of educating undergraduates versus graduate students: “Due to the costs and the cross-subsidization of undergraduate and graduate instruction and research, and at the suggestion of the Legislative Analyst’s Office, these analyses were discontinued. No analyses were done to determine the undergraduate versus graduate costs of operating libraries, maintaining facilities, or managing the University.” Since the university cannot figure out how to separate costs for graduate and undergraduate students, it now simply uses a generalized average that makes it impossible to tell how the system is actually spending its money.

The problem of budget transparency is so important because even though the university claims that reducing undergraduate enrollments is a way to save money, they really do not know if this true. In fact, while the official policy of the regents is to increase the number of graduate students versus undergraduates, it is clear that the campuses are doing the opposite, and I suspect the reason for this conflict is that the local leaders realize that undergraduates are the only real source of flexible income.

In order to correct these problems, we need to work with the Legislative Analyst and the Department of Finance to require the university to calculate the real cost of educating undergraduate, graduate, and professional students. We should also require the university to report on its non-instructional costs with the goal of seeing how much the campuses are spending on administration.

Tuesday, May 24, 2011

How the UC Calculates the Instructional Cost and Funding per Student

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.

Tuesday, May 17, 2011

Will the Regents Protect the Middle Class?

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.

Tuesday, May 10, 2011

UC Considering Raising Tuition 40%

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.

Tuesday, May 3, 2011

The Battle Over Online Education Continues

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.