Monday, September 26, 2011

A Report from Congress and the White House

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.

Tuesday, September 13, 2011

UC-AFT Going to the White House

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.

Monday, September 12, 2011

UC Might Increase Tuition 81% Over the Next Four Years

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.

Friday, September 2, 2011

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

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.