Thursday, February 14, 2013

Some Real UC Budget Facts

To understand the truth about the UC budget over the last five years, we can look at numbers provided by the legislative analyst and the department of finance. In 2007-8, UC received $3.2 billion from the state, and in 2011-12, it received $2.2 billion; During this time, net tuition went from $1.3 billion to $2.4 billion (these figures subtract 30% for return to aid). So the $1 billion in state cuts were made up for by a $1.1 billion in tuition increases. Moreover, in 2008-9, federal recovery money added $716 million, and another $106 million in 2010-11. From the LAO analyst’s perspective, tuition increases have actually outpaced state reductions. However, UCOP constantly claims that tuition increases have only made up for a third of the state reductions. There seems to be no logical basis for this claim. Perhaps what they are doing is projecting what they wanted to get from the state, and then comparing that figure to tuition increases, but this type of math really makes the legislature not trust the university.

For instance, Speaker John Perez stated at the last regents meeting that, “We've made roughly $900 million in cuts and you've increased fees $1.4 billion dollars. The [fee] increases were disproportionate to the level of disinvestment by the state.” While I do think Perez’s number are a little off, we can look at historical data from the LAO to clarify the situation. Using 2007-8 as our baseline, the following year, the federal recovery money made up for the state reduction, but tuition went up over $700 million (and some faculty and staff had a pay cut called a furlough). The next year, the state funding was $700 million less than 2007-8, and tuition revenue went up $390 million, so we can say the total loss for the first two years was $310 million. In 2010-11, additional recovery money reduced that year’s state reduction to $230 million, but tuition revenue increased $430 million. In 2011-12, the baseline state reduction was $1 billion, and the tuition increase was over $1 billion. If we add up all of these yearly numbers, over the four-year period, the total reduction was $100 million, and if we look at the budget for 2012-13, the tuition revenue is up $1.1 billion from 2007-8’s rate, and state funds are down $700 million. In other words, the five-year change is that UC revenue from tuition and state funds is up $300 million.

This is not to say that relatively flat revenue is a good thing or that students should now be paying almost as much of the state, but what it does show is that UCOP is addicted to presenting false numbers, and the state is starting to fight back. In fact, the governor’s latest budget proposal for 2013-14 has the state giving the UC $2.8 billion, while tuition is projected to be $3.8 billion, which is the same tuition projection as last year and does not take into account the subtraction for institutional aid. Furthermore, the tuition revenue projection will have to be increased because the UC will be accepting a higher number of high-paying non-resident students next year, and they still have not decided on raising fees for professional degree students. In short, using 2007-8 as our baseline, tuition next year should outpace the state reduction by at least $700 million.

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  2. The tuition revenue increase numbers factor in 'return to aid,' right?

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    1. Yes, the tuition figures factor in the return to aid. Yudof just said on the radio that tuition increases only made up for 38% of state cuts. Where does the number come from?

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