Tuesday, January 31, 2012

Obama, Yudof, and the Future of Higher Ed

At the University of Michigan, President Obama made an important speech about his new push to control tuition increases and student debt at American universities. In Ann Arbor, he told college and university leaders that, “You can't assume that you'll just jack up tuition every single year. If you can't stop tuition from going up, then the funding you get from taxpayers each year will go down. We should push colleges to do better. We should hold them accountable if they don't.” The policy behind this statement can be found in his new Race to the Top initiative for higher education. Basically, the president wants to use federal grants and loans as a way of pressuring public universities and colleges to contain tuition increases, and while he does realize that state budge cuts have played a role in tuition increases, it is clear that he thinks that there are other reasons for the escalating costs. Moreover, the president wants to use a billion-dollar grant system to provide funding to states that help to control tuition increases.

In order to discuss this new initiative, PBS had President Yudof on the News Hour. The first question asked was the following: “At basic level, do you agree with the president's observation that the fast-rising cost of getting a college education is harming access?” Yudof’s response was, “You have to remember the president didn't mention that there's been systematic disinvestment in higher education. Our budget was cut $750 million in a year, about 25 percent . . . A third of our tuition goes back into financial aid and is distributed to low-income students -- 55 percent of our students pay no tuition -- 39 percent of the students are Pell-eligible, relatively low-income families. That's the reality.” In other words, Yudof blamed the move to a high fee, high aid model solely on state budget cuts.

While it is obvious that the state budge cuts have a direct effect on tuition increases, we have also seen tuition increases when the state contribution to the UC system has gone up. Furthermore, the other guest on the show, Richard Vedder, pointed out that there has been a massive increase in federal money going to universities and colleges, and that the increase in federally funded grants and loans has allowed universities to continue to spend more as they reduce their reliance on state support.

When President Yudof was asked about the rising costs of higher ed, he responded in the following manner, “Our costs are actually down 15 percent per credit hour over the last 10 years. That's the reality. The states don't want to pay. So it's like you go to your drugstore, the insurance company doesn't want to pay, your co-pay goes from $10 to $20. That doesn't mean the cost of the drug has doubled. It just means your costs have doubled.” This response is very revealing because Yudof is openly admitting that as tuition increases, the university is actually spending less money on educating students.

So not only are students paying more and getting less, but as Richard Vedder argued, universities are increasing their spending on non-educational expenses, like administration: “But it is also clear that universities in the United States over the last generation or so have enormously increased their staffs, for example, administrative personnel, student service personnel. There are climbing walls. They're not in and of themselves all that important, but the cumulative effects of a lot of spending on things outside of the core missions has contributed somewhat to the inflation in college costs.” In support of Vedder’s claims, my own research shows that universities now spend on average about 10% of their total budgets on undergraduate education, but undergraduates and states support 35% of the total university budgets. Meanwhile, the costs for professional education, administration, and research continues to increase, and so as undergraduates pay more, they end up subsidizing other parts of their universities to a greater extent.

When asked what would happen if the federal government decreased its support for the University of California, Yudof replied that, “classes will get bigger, class access may suffer, time to degree may grow. I agree with Professor Vedder. We have to do a better job of cutting our budgets. If we have too many administrators, let's reduce the number.” While we have seen some reduction of administrators at the Office of the President, we are still waiting to see what the campuses will do about administrative bloat. Furthermore, class sizes have already gotten bigger and the access to require classes has already decreased, so it is hard to see how the university is going to maintain educational quality as it increases tuition and aid.

What we should push for is clearer budget transparency so we can see how universities are actually spending the money they do have. We also have to insist on a renewed commitment to undergraduate education, and a major emphasis on making sure that federal research grants receive enough overhead funding (indirect costs) to make them at least break even. As a way of pushing this agenda, I have been invited to the White House to make a presentation to the administration.


  1. Bob,
    yes there are too many administrators and they are too highly paid. But if you look at the budgets of Colleges - the fundamental academic unit of a campus - they spend the majority of their base budgets on ladder rank faculty salary. I am familiar with the budgets of three Colleges on my campus and in each one ca 80% of the state funds base budget goes to academic senate faculty. Lecturers, TAs, staff, and operational expenses amount to ca 20%. Not only that, senate faculty salaries continue to rise rapidly, fed by the senate merit & promotion system and a rapid rise in the number of accelerated merit actions. Maybe all this is justified - certainly we want to recruit and retain excellent professors. I just want to make the point that senate faculty salaries are a large expense and one that is increasing. No one on the faculty side ever wants to admit that. But when I see a prof making $300K/yr and teaching one 10 week class that seems just as ridiculously expensive as hiring useless administrative drones.

  2. Here's what you ask:

    1) Insist that the schools have "skin in the game." They are brokering loans just as the mortgage brokers did. If the IBR only yields a payback of 45% of the principle, then the schools only get 45%.

    2) Push your research that schools can make money on students, even at much lower than they charge. The costs of putting kids in rooms with 200 chairs is very, very cheap.


  3. On an all in basis UC Berkeley is the most expensive public university in USA. Foreign student tuition at UC Berkeley (UCB) is subsidized in the guise of diversity while instate student tuition/fees are doubled. UCB Chancellor Robert J Birgeneau displaces Californians qualified for public UCB with a $50,600 payment from foreign students.

    UC Berkeley is not increasing enrollment. Birgeneau accepts $50,600 foreign students and displaces qualified instate Californians (When depreciation of assets funded by Californians are in foreign and out of state tuition calculations, out of state and foreign tuition is more than $100,000 + and does NOT subsidize instate tuition). Like Coaches, Chancellors Who Do Not Measure Up Must Go: remove Birgeneau.

    More recently, Chancellor Birgeneau’s campus police deployed violent baton jabs on students protesting Birgeneau’s tuition increases. The sky will not fall when Birgeneau and his $450,000 salary are ousted. Opinions make a difference; email UC Board of Regents marsha.kelman@ucop.edu

  4. I just realized that I am a useless drone in going into 2 decades of work for the UC in a public service capacity. Never in a million years did I imagine that the barbarian inquisition would lead to a lifeboat ethics sacrifice of UC staff employees while the faculty and administrators just keep counting their money. After hearing Obama's "keep a lid on costs speach" staff members should be shaking in their boots as the future looks grim (given that the major expense of a University are staff employees and their benefits). After the canceled retirement medical benefits, the new soon to be 5% (or 6.5%)of pay pension contributions, increased parking fees, increased medical premiums, compacts that failed and the UC's generous 3% pay increase over the last 5 years (average .6% raise each year for unrepresented employees) only God knows what they are going to do to us next. At this point I honestly believe that anything can happen at work at any time. I wish I would have gone to work at an employer that really had a performance based human resources approach, instead of one that claims to (the UC) while coming up empty year after year. At this point just a written plan for the future would be nice, but then again after the numerous failed compacts- would I believe it? Who would have thought that going to work at the worlds "premier research university" as a staff employee would be tantamount to being shanghaied onto a sinking ship and financially rat%*#@ed. If you are headed to the White House please take this posts sentiment with you- and tell Obama to put this in his pipe and smoke it.

  5. Chancellor’s and Provost ‘s tuition increases make it impossible to keep the promise of equality of opportunity: access, affordability is farther and farther out of reach. Self-absorbed Chancellor, Provost are outspoken for elete public UC Berkeley ‘charging Californians much higher’ tuition. Cal. Chancellor Birgeneau, Provost Breslauer leave an indelible legacy on university access, affordability.

    Cal. tuition is rising faster than costs at other universities. Number 1 ranked Harvard is now less costly. Birgeneau, Breslauer decision to ‘charge Californians higher tuition’ for eletist Cal. make it the most expensive of the expensive public universities!

    Birgeneau ($450,000) Breslauer ($306,000) like to blame the politicians, since they stopped giving them every dollar demanded. The ‘charge Californians higher’ tuition skyrocketed fees by an average 14% per year from 2006 to 2011-12 academic years. If Chancellor Provost had allowed fees to rise at the same rate of inflation over the past 10 years they would still be in reach of most middle income students. Breslauer Berheneau increase disparities in higher education and defeat the promise of equality of opportunity. An unacceptable legacy for all Californians.

    Additional funding should sunset. The sluggish economy and 10% unemployment devistate family education savings. Simply asking for more taxes to fund self-absorbed Cal.senior leadership, old inefficient higher education models and fund excessive faculty staff compensation, burdensome bonuses, is not the answer.

    UC Berkeley is to maximize access to the widest number of Californians at a reasonable cost: mission of diversity, equality of opportunity. Birgeneau’s Breslauer’s ‘charge Californians higher’ tuition denies middle income families the transformative value of Cal.

    The California dream: keep it alive at Cal. Birgeneau resigned; fire (honorably retire) Provost George W Breslauer.

    Opinions? UC Board of Regents marsha.kelman@ucop.edu Calif. State Senators, Assembly members.

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