The UC Cost Wars

Last year, the legislature moved UC budget transparency language through the budget conference committee's "supplemental report" process. The language that was adopted by the legislature and became part of the supplemental report is the following: “Item 6440-001-0001—University of California (UC). It is the intent of the Legislature, and in follow-up to State Audit Report 2010-105, that by July 31, 2012, UC provide to the appropriate legislative budget subcommittees and LAO the recommendations of the systemwide working group established to examine variation in funding across the system. Further, it is the intent of the Legislature that UC identify the amount of revenues from the general funds and tuition budget that each campus received in 2012 13 for specific types of students (such as undergraduate, graduate, and health sciences) and explain any differences in the amount provided per student among the campuses to the appropriate legislative budget subcommittees and LAO by January 1, 2014.”

In response to this legislative request for accountability, the UC has told the legislature that it cannot calculate how much it costs to educate specific types of students: “The University is unable to provide information on funding provided for specific levels of students. Funding from the State is neither received nor allocated to the campuses by level of student. Funding for enrollment has been received from the State for more than 15 years on the basis of a marginal cost calculation that does not distinguish among levels of students. Nor have allocations to the campuses been made on that basis. The University has consistently stated that information on cost of education by level of student – or expenditures by level of student – are impossible to determine, given the myriad way in which funds provided from the State and other core funds are used.”

What is strange about this response is that in the same document, the UC states that it has moved to a new model of distributing state funds based on the following logic: “Per-student funding is to be distributed on a weighted basis in which undergraduate, postbaccalaureate, graduate professional, and graduate academic master’s students are weighted at 1, doctoral students at 2.5, and health sciences students at 5 (except health sciences undergraduate students are at 1 and health sciences academic doctoral students are at 2.5).” So while the UC claims it cannot calculate the different costs of educating different levels of students, it is basing state funding distributions on a differentiated cost basis.

All of this may be moot because in the January state budget proposal, the Governor's administration proposed stronger, trailer bill language on UC budget transparency: “Article 7.5 Expenditures for Undergraduate and Graduate Instruction and Research Activities 92670. (a) The University of California shall report biennially to the Legislature and the Department of Finance, on or before October 1, 2014, and on or before October 1 of each even-numbered year thereafter on the total general campus costs of education, on a systemwide and a campus-by-campus basis, segregated by undergraduate instruction, graduate instruction, and research activities. The costs shall also be reported by fund source, including all of the following sources: (1) State General Fund. (2) Systemwide tuition and fees and professional fees. (3) Nonresident supplemental tuition and other student fees. (4) All other sources of income. (b) For purposes of the report required by this section, undergraduate and graduate research for which a student earns credit toward their degree program shall be included under instructional costs. (c) A report to be submitted pursuant to this section shall be submitted in compliance with Section 9795 of the Government Code. (d) The requirement for submitting a report under this section shall become inoperative on January 1, 2021, pursuant to Section 10231.5 of the Government Code.” In other words, the UC is now required to do exactly what we have been asking them to do for ten years, and that is to calculate how much it costs to educate students and how these activities are being funded.

One reason why it is important to have the UC report on educational costs is that many legislators are now pushing online education because they believe the cost of educating undergraduates is driving up tuition and blocking access. However, in reality, undergraduates are already subsidizing different parts of the university. Moreover, the new rebenching funding model pushes some campuses to increase their enrollments of doctoral students, but no one really knows if this will help or hurt the funding of the campuses since no one knows how much it costs to educate graduate students.