The New Yorker Magazine recently had an extensive article on the UC system, and the general frame was that President Yudof is deeply unpopular, the university is broke, and people are rebelling. While the idea that an institution with a record level of revenue has no money is ridiculous, the article did a good job at highlighting many of our recent struggles. For example, a very interesting quote came from Alberto Torrico, the majority leader in the state assembly, who was asked about his new plan to fund the UC system: ”If I gave them a blank check, they'd use it for administrative costs instead of education.” Torrico, who is one of the only legislators in Sacramento who is working on securing funding for the UC system, is right to stress that if the state gives the UC more money, they may just use it to hire more administrators.
Torrico’s bill, AB 656, which would put a 12.5% tax on oil extraction in California and send $1.3 billion to higher education each year, has received no official support from Yudof or the Regents. In fact, when Yudof was asked about this bill, he said that he was unhappy that only 25% of the funds would go to the UC system. In response to Yudof’s discontent, Torrico told The New Yorker reporter that he would say the following to the UC president, “"Do you want twenty-five percent of a billion-plus, or one hundred percent of nothing?" 'Cause I can give you that very easily.” Torrico is displaying here the sentiment of many Democratic legislators who are tired of being attacked by Yudof for never giving the UC system enough money.
Another thread of the article is that there is a new movement arising from the University of California fiscal crisis, and it is unclear, which direction the movement will lead. On the one hand, a new spirit of student and faculty activism is bringing hope to many people inside and outside of the UC system, but, the article stresses that it is unclear what can be accomplished and how long the students, unions, and faculty can work together.
In my travels to New York and Philadelphia over the winter break, I kept hearing about the revolution in California. It seems that people are looking at us to start a new social movement, even if no one can define the target or the goals of the movement. I was surprised to hear on one radio show in New York, the argument that the only progressive social movement in the country challenging the current economic system is the one at the University of California. As strange as it may seem, we have become a small ray of hope for people fighting the privatization of the public sphere and the casualization of the labor force. Let’s hope that we can live up to the expectations of those around the country. Everything starts in California—not only the bad but sometimes the good.
Monday, January 11, 2010
Friday, January 8, 2010
The Governor’s Bold Plan or Another Media Event?
In his State of the State address, Governor Schwarzenegger proposed an ambitious plan for a constitutional amendment to support higher education. The central idea behind this new idea is that the state should reverse its current trend of spending more on incarceration than higher education. As the governor stressed, the state funding for public universities once represented 10% of the budget and prisons made up 3% of the budget; currently, UC and CSU take up 7.5% and prisons eat up 11%. The amendment, which has to be supported by 2/3rds of the legislators and a majority of the voters, would guarantee that universities receive at least 10% of the state general fund budget, and prisons would always receive a lower percentage.
On paper, this looks like a very hopeful proposal, but there are four major problems. The first issue is that the California budget is already dominated by voter approved funding mandates. Many experts blame the recent draconian budget cuts on the fact that not only is it difficult for the state to raise taxes, but lawmakers are forced to spend most of the budget on mandated areas. While the new amendment would treat the universities like K-14, by dictating a certain set formula for funding higher education, the result would be to further tie the hands of the legislators when dealing with budget deficits.
The next problem is that the governor’s main way of reducing the cost of the prison system is to privatize the prisons, and this is a highly unlikely solution. Not only would this amendment have to take on the powerful correctional officers' union, but there is no way of knowing how much privatization would save or if privatization is even a good idea. The real way to bring down the cost of incarceration is to reduce the number of prisoners, and this can only be done by changing the “three strikes” rule and by decriminalizing some non-violent offences like drug possession.
The third problem is that this legislation does nothing to deal with how universities spend the money they get from the state. It is possible that the universities would use the new funds to simply increase the number of administrators. Without tying funding to fiscal accountability measures, new money may just be funneled into old priorities, and the UC has shown that it has no problem using increased funding to support activities unrelated to the university’s core mission.
The fourth major issue is that this is a long-term solution that may undermine the current push to make changes in the UC system. If students, faculty, and workers believe that the governor understands their problems, and he is on their side, they may find that there is no reason to fight against the current decrease in services and the increase in fees. Like the election of Barack Obama, the social movement on the ground may disappear because the leader is saying all of the right things.
The governor did say that he will not cut higher education this year, and this is a good thing, but President Yudof is asking for a major increase in funding, and if he does not get this increase, we will probably see a continued move to raise fees, cut services, and lower the quality of public higher education. The university has already radically reduced its funding for undergraduate education, and there is reason to believe that this agenda will be pursued in the future unless people rise up on the ground and fight for a different vision of the university. In fact, in The New York Times article covering the governor's new proposal, his chief of staff, Susan Kennedy, is quoted as saying that. "“Those protests on the U.C. campuses were the tipping point." It appears our actions have had some effect, but we cannot stop now.
On paper, this looks like a very hopeful proposal, but there are four major problems. The first issue is that the California budget is already dominated by voter approved funding mandates. Many experts blame the recent draconian budget cuts on the fact that not only is it difficult for the state to raise taxes, but lawmakers are forced to spend most of the budget on mandated areas. While the new amendment would treat the universities like K-14, by dictating a certain set formula for funding higher education, the result would be to further tie the hands of the legislators when dealing with budget deficits.
The next problem is that the governor’s main way of reducing the cost of the prison system is to privatize the prisons, and this is a highly unlikely solution. Not only would this amendment have to take on the powerful correctional officers' union, but there is no way of knowing how much privatization would save or if privatization is even a good idea. The real way to bring down the cost of incarceration is to reduce the number of prisoners, and this can only be done by changing the “three strikes” rule and by decriminalizing some non-violent offences like drug possession.
The third problem is that this legislation does nothing to deal with how universities spend the money they get from the state. It is possible that the universities would use the new funds to simply increase the number of administrators. Without tying funding to fiscal accountability measures, new money may just be funneled into old priorities, and the UC has shown that it has no problem using increased funding to support activities unrelated to the university’s core mission.
The fourth major issue is that this is a long-term solution that may undermine the current push to make changes in the UC system. If students, faculty, and workers believe that the governor understands their problems, and he is on their side, they may find that there is no reason to fight against the current decrease in services and the increase in fees. Like the election of Barack Obama, the social movement on the ground may disappear because the leader is saying all of the right things.
The governor did say that he will not cut higher education this year, and this is a good thing, but President Yudof is asking for a major increase in funding, and if he does not get this increase, we will probably see a continued move to raise fees, cut services, and lower the quality of public higher education. The university has already radically reduced its funding for undergraduate education, and there is reason to believe that this agenda will be pursued in the future unless people rise up on the ground and fight for a different vision of the university. In fact, in The New York Times article covering the governor's new proposal, his chief of staff, Susan Kennedy, is quoted as saying that. "“Those protests on the U.C. campuses were the tipping point." It appears our actions have had some effect, but we cannot stop now.
Monday, January 4, 2010
Auditing the UC System
A group of UC unions are planning to submit an official request for the state to audit the UC system. First of all, we want the audit to examine how the UC is spending state funds. Specifically, we are concerned that funds targeted for instruction and research are going for other purposes, and the result is that student fees are going up, but there are fewer classes and fewer teachers and researchers. As a state audit showed in 2001, state funds are often redirected to support an expansion of administration and staff, and we feel that an effective audit should be able to establish which job titles are growing and whether or not these position supports the core mission.
The audit also needs to examine the UC compensation policies and trends. In 2006, the state performed an audit of UC compensation policies and found many inconsistencies; however, this audit only looked at senior management, and we feel that the compensation issues are much deeper and wider. In 2007-2008, the UC had 6,647 employees making over $150,000, and 3,010 earning $200,000 or more. Furthermore, 1,538 people made over $250,000, and 779 earned over $300,000. We believe a thorough audit could determine where state money is going and how compensation is being decided. While the UC is an autonomous institution, the state does have oversight over the money the state provides.
The state auditor should also determine which funds are legally restricted in the UC budget. The university often claims that it has no money to pay for salary increases or to support student services because most of its funds are restricted. We believe an outside authority should be able to make this determination and clarify once and for all which UC funds are restricted.
Perhaps the most important judgment that a state auditor should make is whether the UC was really facing a fiscal emergency when it initiated its furlough plan and gave extraordinary powers to President Yudof in July 2009. There are accepted standards for defining a fiscal emergency, and we need to be sure UCOP met those standards.
We would also like to know how much money the UC system is saving through the furlough system, and where the savings are going. At first, the Office of the President said that furloughs would save $185 million, but after we calculated that the number would be closer to $600 million, the UC said that most of the extra money would be returned to the programs.
The state auditor should also determine how much the UC system has lost in state funding over the last five years. While this number should be easy to calculate, we have received many different figures. There is also a question of what happened to the federal stimulus money (ARRA) that was earmarked for the UC system.
Please give feedback on what you would like us to audit.
The audit also needs to examine the UC compensation policies and trends. In 2006, the state performed an audit of UC compensation policies and found many inconsistencies; however, this audit only looked at senior management, and we feel that the compensation issues are much deeper and wider. In 2007-2008, the UC had 6,647 employees making over $150,000, and 3,010 earning $200,000 or more. Furthermore, 1,538 people made over $250,000, and 779 earned over $300,000. We believe a thorough audit could determine where state money is going and how compensation is being decided. While the UC is an autonomous institution, the state does have oversight over the money the state provides.
The state auditor should also determine which funds are legally restricted in the UC budget. The university often claims that it has no money to pay for salary increases or to support student services because most of its funds are restricted. We believe an outside authority should be able to make this determination and clarify once and for all which UC funds are restricted.
Perhaps the most important judgment that a state auditor should make is whether the UC was really facing a fiscal emergency when it initiated its furlough plan and gave extraordinary powers to President Yudof in July 2009. There are accepted standards for defining a fiscal emergency, and we need to be sure UCOP met those standards.
We would also like to know how much money the UC system is saving through the furlough system, and where the savings are going. At first, the Office of the President said that furloughs would save $185 million, but after we calculated that the number would be closer to $600 million, the UC said that most of the extra money would be returned to the programs.
The state auditor should also determine how much the UC system has lost in state funding over the last five years. While this number should be easy to calculate, we have received many different figures. There is also a question of what happened to the federal stimulus money (ARRA) that was earmarked for the UC system.
Please give feedback on what you would like us to audit.
Sunday, December 27, 2009
A Recap for 2009
Perhaps the biggest story of 2009 for the UC system is the way a fake fiscal crisis has been used to consolidate the president's powers and impose austerity plans worthy of an IMF or World Bank takeover. Using the state reduction of $600 million (out of an operating budget of over $20 billion), the Office of the President has suspended most forms of shared governance and has a spent a great deal of money and time on circulating false and misleading budgetary information. This lack of transparency coupled with an authoritarian imposition of furloughs and fee increase has led to a new protest movement composed of students, faculty, workers, and unions.
President Yudof has already signaled that more of the same is coming in our future. By asking the state to come up with an additional $913 million in funding for the UC system, Yudof has guaranteed that the state will not deliver. Once the state fails to give the UC system the university’s requested amount, Yudof will feel justified to impose further draconian cuts to workers' salaries and vital educational services. Instead of looking at how the university can save money by reducing its ever-expanding administrative class, Yudof seems intent on making students pay more for less.
While students, faculty, and unions will be striking and protesting on March 4th to protect public education in the state of California, we will also be working on our local campuses to hold our schools accountable to their public mission. Thus, after students return back to the campuses and find that their increased fees have resulted in an expansion of class sizes and a reduction of class offerings, there will be a renewed spirit of protest.
We should also expect further discussions of how the police acting during the protests of 2009, and the use of tasers, pepper spray, and batons will be investigated and protested. The fact that the university can only run its operations by relying on violence and propaganda shows that the current administration is morally bankrupt and only represents the interests of the people at the top of the system. If the majority of students, faculty, and workers ban together and demand a more just and equitable university, we can defend high quality public higher education in the state of California.
President Yudof has already signaled that more of the same is coming in our future. By asking the state to come up with an additional $913 million in funding for the UC system, Yudof has guaranteed that the state will not deliver. Once the state fails to give the UC system the university’s requested amount, Yudof will feel justified to impose further draconian cuts to workers' salaries and vital educational services. Instead of looking at how the university can save money by reducing its ever-expanding administrative class, Yudof seems intent on making students pay more for less.
While students, faculty, and unions will be striking and protesting on March 4th to protect public education in the state of California, we will also be working on our local campuses to hold our schools accountable to their public mission. Thus, after students return back to the campuses and find that their increased fees have resulted in an expansion of class sizes and a reduction of class offerings, there will be a renewed spirit of protest.
We should also expect further discussions of how the police acting during the protests of 2009, and the use of tasers, pepper spray, and batons will be investigated and protested. The fact that the university can only run its operations by relying on violence and propaganda shows that the current administration is morally bankrupt and only represents the interests of the people at the top of the system. If the majority of students, faculty, and workers ban together and demand a more just and equitable university, we can defend high quality public higher education in the state of California.
Monday, December 21, 2009
The New UC Mega Scandal? The U.S. Senate Investigates the UC Budget
In 2007, David Kessler, the Dean of the UCSF Medical School was fired after he complained that the campuses had provided him with false and misleading information concerning the state of its budget. According to the documents sent by the UC to senate investigators Kessler did not understand that many of UC’s budget documents are crafted for particular audiences, and the only legally accountable budgetary figures are found in the audited annual statements (attachment B, page 5). In other words, UC admits that the budgetary figures it releases to its employees and the public are often at odds with its own financial statements.
At the heart of the dispute between Kessler and UCSF is the question of indirect funds for external grants and the use of endowment funds. Kessler contends that he was promised access to over $46 million in funds that he could use at his discretion, while the university argues that the dean did not understand the nature of endowments and grants. According to the official UC response to the federal investigators, while endowment money is usually dedicated to specific purposes, many different administrators have discretion over the actual use of the funds. Likewise, external grants often come with indirect funds that are sent to the Office of the President and then redistributed back to the local programs. According to the UC’s legal representation, indirect funds associated with external grants are stored in a Facilities and Administrative “cost pool,” and these funds may be “spent by the University in its discretion” (Attachment A, page 7). The translation of this statement is that the campus has great deal of flexibility in regards to how it uses the large sum of money gathered by the indirect costs of grants (a total of $1 billion in 2009).
The university claims that for each federal grant, it receives an additional 26% for indirect costs, and the real cost should be closer to 29-30% (page 8). Here is where a major accounting conflict ensues. I have been arguing with several UC faculty members about how indirect costs are distributed and accumulated, and I have argued the following: There is no way of knowing if grants individually or on the whole make or lose money. Since most grants give the same generalized percentage to administration, staff, utilities, and maintenance, it is impossible to track the flow of money pertaining to any particular grant. For instance, if my grant to develop a new drug pays $10,000 into general administration, how could anyone tell if I paid enough of many different administrators' salaries.
When you get into the actual details of a grant, you discover, like every other part of the university, that money from many different sources gets mixed together. For example, if I am a dean, I am being paid out of state funds, student fees, grant overhead, some endowment money, etc. This mixing of funds is precisely what the U.S. Senate is investigating in relation to federal NIH grants - the feds have told me that they cannot track the flow of money because it all gets sent to UCOP and then redistributed back to the campus. Also, a question that I was asked by a senate staffer was "how do you put the price on a grant using a particular facility; after all, UC does not appreciate its assets and lists each building based on its original value" (which is also a fiscal fiction). We would all like to believe that this system is rational, but it is not.
This same problem of accounting for grant money is also causing problems for the U.S. Senate’s investigation of the use of endowment funds. After Kessler made his original allegations, the UC embarked on three separate reviews of their accounting processes, and they found no malfesiance. However, UCSF has just signed on for another expensive audit with Pricewaterhouse Coopers, and this time, they promise to look at the actual financial statements regarding the grants and endowment funds. One of the issues in the Kessler case is the question of how much discretion a dean has in relation to an endowment gift. The UC’s lawyers argue that in the case of a grant given for cancer research, the dean may have tremendous latitude in deciding how the endowed funds are used, and the central argument of the administration is that most endowments give a fair amount of discretion to the administration (page 11). What is troubling is that the UC falsely testified to the
state senate that an external audit showed that the tracking of endowments and grants could be verified by the audited financial statements. It turns out, that the outside consultants never tried to match these different records, and they were never given the proper documentation to audit the UC’s financial statements.
To be continued.
At the heart of the dispute between Kessler and UCSF is the question of indirect funds for external grants and the use of endowment funds. Kessler contends that he was promised access to over $46 million in funds that he could use at his discretion, while the university argues that the dean did not understand the nature of endowments and grants. According to the official UC response to the federal investigators, while endowment money is usually dedicated to specific purposes, many different administrators have discretion over the actual use of the funds. Likewise, external grants often come with indirect funds that are sent to the Office of the President and then redistributed back to the local programs. According to the UC’s legal representation, indirect funds associated with external grants are stored in a Facilities and Administrative “cost pool,” and these funds may be “spent by the University in its discretion” (Attachment A, page 7). The translation of this statement is that the campus has great deal of flexibility in regards to how it uses the large sum of money gathered by the indirect costs of grants (a total of $1 billion in 2009).
The university claims that for each federal grant, it receives an additional 26% for indirect costs, and the real cost should be closer to 29-30% (page 8). Here is where a major accounting conflict ensues. I have been arguing with several UC faculty members about how indirect costs are distributed and accumulated, and I have argued the following: There is no way of knowing if grants individually or on the whole make or lose money. Since most grants give the same generalized percentage to administration, staff, utilities, and maintenance, it is impossible to track the flow of money pertaining to any particular grant. For instance, if my grant to develop a new drug pays $10,000 into general administration, how could anyone tell if I paid enough of many different administrators' salaries.
When you get into the actual details of a grant, you discover, like every other part of the university, that money from many different sources gets mixed together. For example, if I am a dean, I am being paid out of state funds, student fees, grant overhead, some endowment money, etc. This mixing of funds is precisely what the U.S. Senate is investigating in relation to federal NIH grants - the feds have told me that they cannot track the flow of money because it all gets sent to UCOP and then redistributed back to the campus. Also, a question that I was asked by a senate staffer was "how do you put the price on a grant using a particular facility; after all, UC does not appreciate its assets and lists each building based on its original value" (which is also a fiscal fiction). We would all like to believe that this system is rational, but it is not.
This same problem of accounting for grant money is also causing problems for the U.S. Senate’s investigation of the use of endowment funds. After Kessler made his original allegations, the UC embarked on three separate reviews of their accounting processes, and they found no malfesiance. However, UCSF has just signed on for another expensive audit with Pricewaterhouse Coopers, and this time, they promise to look at the actual financial statements regarding the grants and endowment funds. One of the issues in the Kessler case is the question of how much discretion a dean has in relation to an endowment gift. The UC’s lawyers argue that in the case of a grant given for cancer research, the dean may have tremendous latitude in deciding how the endowed funds are used, and the central argument of the administration is that most endowments give a fair amount of discretion to the administration (page 11). What is troubling is that the UC falsely testified to the
state senate that an external audit showed that the tracking of endowments and grants could be verified by the audited financial statements. It turns out, that the outside consultants never tried to match these different records, and they were never given the proper documentation to audit the UC’s financial statements.
To be continued.
Monday, December 14, 2009
Only 3.5% of the UCLA Budget is Spent on Undergraduates: Where Does the Rest Go?
According to Steve Olson, the UCLA budget director, 12% of the UCLA budget in 2008-2009 came from the state, but over 50% of the core budget (instruction, research, and administration) was state funded. While the total UCLA budget was $4.7 billion, I calculate that only about $160 million, or just under 3.5%, was spent on undergraduate education. Furthermore, state funds and student fees brought over $1 billion to the campus, but only a small fraction of this amount was spent on instruction-related activities. If budgets are really a set of priorities, it becomes obvious why undergraduate education is often downsized.
Looking at the UCLA College of Letters and Sciences, the total budget was $234 million in 2008-2009, and 44% of the spending went to fund ladder faculty salaries, 3% to temporary faculty salaries, 9% to operating costs, 14% to benefits, 15% to staff, 9% to graduate assistants, and 6% to other academic titles. During the year, there were 22,000 undergraduates in the College, and I calculate that if we remove the costs associated with graduate education, (50% of the senate faculty courses were graduate courses), it cost the school $6,363 to educate each student for the year (this figure includes funds for salaries, benefits, staff, administration, utilities, and maintenance). While UC got $8,309 in student fees per student and $18,00 in state funds per student, the university still declared that they were losing money on each student, but my calculation shows that UCLA pocketed at least $20,000 on every undergraduate student. As I have pointed out before, the UC asserts that the state only gave $7,400 dollars for each student in 2008-2009, but this number is based on what they call “real dollars,” which includes some undeclared inflation adjustment.
It has been recently revealed that all student fees and state funds are collected by the Office of the President, and then redistributed to the campus according to some secret formula (for a spreadsheet on how much each campus is funded, see here). While the state supports each student at the same level, regardless if the student is a graduate or undergraduate or if the student is from Santa Barbara or Los Angeles, UCOP funds each student on a different basis. For example, in 2008-2009, each student at UCSC received $7,568 in state funding from UCOP, but students at UCLA got $18,745. Apparently, what is happening is that UCOP re-allocates funds students based on their type of education. In fact, each student at UCSF got funded by the state at a rate of $71,000. Here we se direct evidence that not only are undergraduate students subsidizing graduate students, but campuses without professional schools are subsidizing the campuses with professional programs.
In the case of UCLA, the wealthiest campus and the one with the lowest dependence on state funding, we have seen the most draconian cuts to undergraduate programs. There is thus little relation between the recent state budget cuts and the downsizing of undergraduate programs; instead, the more students pay and the more the state gives, the more UCLA increases compensation and funding to people who have little if any connection to academic instruction or research. In fact, the state budget cuts are used to reduce the number of undergraduate courses and to expand undergraduate class sizes.
In a recent provocative statement on the PBS News Hour, President Yudof revealed the inner-logic of the UC funding priorities: "Many of our, if I can put it this way, businesses are in good shape. We’re doing very well there. Our hospitals are full, our medical business, our medical research, the patient care?-so we have this core problem, who’s gonna pay the salary of the English Department? We have to have it. Who’s gonna pay it, and Sociology, and the humanities, and that’s where we’re running into trouble.” From Yudof’s business perspective, the medical centers and research sectors are doing great, but they are being brought down by the needy programs in the humanities and the social sciences. Yet, as I have shown, the opposite is the case; undergraduate programs in the humanities and the social sciences are generating huge profits that are then used to pay for the staff, administration, and faculty that have no relation to the core programs. In this system, the wealthy get wealthier and the poor get starved.
Looking at the UCLA College of Letters and Sciences, the total budget was $234 million in 2008-2009, and 44% of the spending went to fund ladder faculty salaries, 3% to temporary faculty salaries, 9% to operating costs, 14% to benefits, 15% to staff, 9% to graduate assistants, and 6% to other academic titles. During the year, there were 22,000 undergraduates in the College, and I calculate that if we remove the costs associated with graduate education, (50% of the senate faculty courses were graduate courses), it cost the school $6,363 to educate each student for the year (this figure includes funds for salaries, benefits, staff, administration, utilities, and maintenance). While UC got $8,309 in student fees per student and $18,00 in state funds per student, the university still declared that they were losing money on each student, but my calculation shows that UCLA pocketed at least $20,000 on every undergraduate student. As I have pointed out before, the UC asserts that the state only gave $7,400 dollars for each student in 2008-2009, but this number is based on what they call “real dollars,” which includes some undeclared inflation adjustment.
It has been recently revealed that all student fees and state funds are collected by the Office of the President, and then redistributed to the campus according to some secret formula (for a spreadsheet on how much each campus is funded, see here). While the state supports each student at the same level, regardless if the student is a graduate or undergraduate or if the student is from Santa Barbara or Los Angeles, UCOP funds each student on a different basis. For example, in 2008-2009, each student at UCSC received $7,568 in state funding from UCOP, but students at UCLA got $18,745. Apparently, what is happening is that UCOP re-allocates funds students based on their type of education. In fact, each student at UCSF got funded by the state at a rate of $71,000. Here we se direct evidence that not only are undergraduate students subsidizing graduate students, but campuses without professional schools are subsidizing the campuses with professional programs.
In the case of UCLA, the wealthiest campus and the one with the lowest dependence on state funding, we have seen the most draconian cuts to undergraduate programs. There is thus little relation between the recent state budget cuts and the downsizing of undergraduate programs; instead, the more students pay and the more the state gives, the more UCLA increases compensation and funding to people who have little if any connection to academic instruction or research. In fact, the state budget cuts are used to reduce the number of undergraduate courses and to expand undergraduate class sizes.
In a recent provocative statement on the PBS News Hour, President Yudof revealed the inner-logic of the UC funding priorities: "Many of our, if I can put it this way, businesses are in good shape. We’re doing very well there. Our hospitals are full, our medical business, our medical research, the patient care?-so we have this core problem, who’s gonna pay the salary of the English Department? We have to have it. Who’s gonna pay it, and Sociology, and the humanities, and that’s where we’re running into trouble.” From Yudof’s business perspective, the medical centers and research sectors are doing great, but they are being brought down by the needy programs in the humanities and the social sciences. Yet, as I have shown, the opposite is the case; undergraduate programs in the humanities and the social sciences are generating huge profits that are then used to pay for the staff, administration, and faculty that have no relation to the core programs. In this system, the wealthy get wealthier and the poor get starved.
Thursday, December 10, 2009
UC Pays Big Bucks for Fake Compensation Study
The UC has spent a great deal of money on hiring a consulting firm, Mercer, to analyze their compensation, and not only is the study completely flawed and incomplete, but a more effective study could have been done by anyone for free by just using the salary data available on the web. The study (available here) tries to show that the high-paid administrators and star faculty are actually underpaid, while the low-paid unionized workers are above the market rate. Here are the major claims according to the UC:
• On average, cash compensation for UC faculty is 10 percent below market, and total compensation (cash plus benefits) is 4 percent behind comparable institutions.
• Union-represented service workers are closer to the market average than all other categories of employees in the UC system, and their total compensation (cash plus benefits) is 18 percent higher than their counterparts at other institutions.
• The largest compensation gap affects senior management group members (e.g., president, chancellors, deans, vice presidents, chief financial officers) whose cash compensation, on average, was 22 percent lower than their counterparts. Total compensation for top administrators, including university chancellors, was 14 percent below their counterparts at comparable institutions.
• Cash compensation for Managers, senior professionals and professionals and support staff – both union- represented and non-represented – lags behind their counterparts as well. On average, the gap for all of those categories ranges from 13 percent to 19 percent.
• For UC medical centers, results show that cash compensation for most UC medical center employees is near or slightly above market, except for staff physicians whose pay is 18 percent below market.
• In total compensation, all medical center employee groups, except staff physicians, were above market by 4 to 17 percent.
The study comes with a major disclaimer: “The 2009 study followed established industry practices. Consistent with industry practices, cash compensation was defined as base salary, excluding forms of rewards that generally are not a part of ongoing compensation, such as one-time relocation allowances, stipends for assuming additional temporary responsibilities, summer salaries for faculty, one-time bonuses and the like.” The study thus only looks at base pay, while as I have shown, more than 36% of the pay of the 3,600 people making over $200,000 in the UC system comes from non-base pay compensation (and this does not include benefits). The total gross pay of the over $200,000 earners in 2008 was $1 billion and the base pay was $640,000 million (here is the spread sheet:). (I detail, who earned this money, and how it went up 40% from 2006 to 2008 here ). The base pay of the remaining, 147,000 people, half of them unionized, while none of the top are unionized, was $7.3 billion and their gross pay was $7.9 billion (here is the spreadsheet: ).
Another giant flaw in the Mercer study is that their sample is unscientific. They readily admit that they only looked at the salaries of half of the employees (page 9) even though all of the salaries are in the pubic domain. They also excluded whole categories of employees, and as I have shown in my study of senate faculty salaries, due to the incredible imbalance of compensation, with most of the raises going to the people at the top, you cannot simply look at the average salary.
This kind of study and this type of waste of funds is why the workers and the unions and the state do not trust the UC administration. They will pay large sums of money to circulate false information
• On average, cash compensation for UC faculty is 10 percent below market, and total compensation (cash plus benefits) is 4 percent behind comparable institutions.
• Union-represented service workers are closer to the market average than all other categories of employees in the UC system, and their total compensation (cash plus benefits) is 18 percent higher than their counterparts at other institutions.
• The largest compensation gap affects senior management group members (e.g., president, chancellors, deans, vice presidents, chief financial officers) whose cash compensation, on average, was 22 percent lower than their counterparts. Total compensation for top administrators, including university chancellors, was 14 percent below their counterparts at comparable institutions.
• Cash compensation for Managers, senior professionals and professionals and support staff – both union- represented and non-represented – lags behind their counterparts as well. On average, the gap for all of those categories ranges from 13 percent to 19 percent.
• For UC medical centers, results show that cash compensation for most UC medical center employees is near or slightly above market, except for staff physicians whose pay is 18 percent below market.
• In total compensation, all medical center employee groups, except staff physicians, were above market by 4 to 17 percent.
The study comes with a major disclaimer: “The 2009 study followed established industry practices. Consistent with industry practices, cash compensation was defined as base salary, excluding forms of rewards that generally are not a part of ongoing compensation, such as one-time relocation allowances, stipends for assuming additional temporary responsibilities, summer salaries for faculty, one-time bonuses and the like.” The study thus only looks at base pay, while as I have shown, more than 36% of the pay of the 3,600 people making over $200,000 in the UC system comes from non-base pay compensation (and this does not include benefits). The total gross pay of the over $200,000 earners in 2008 was $1 billion and the base pay was $640,000 million (here is the spread sheet:). (I detail, who earned this money, and how it went up 40% from 2006 to 2008 here ). The base pay of the remaining, 147,000 people, half of them unionized, while none of the top are unionized, was $7.3 billion and their gross pay was $7.9 billion (here is the spreadsheet: ).
Another giant flaw in the Mercer study is that their sample is unscientific. They readily admit that they only looked at the salaries of half of the employees (page 9) even though all of the salaries are in the pubic domain. They also excluded whole categories of employees, and as I have shown in my study of senate faculty salaries, due to the incredible imbalance of compensation, with most of the raises going to the people at the top, you cannot simply look at the average salary.
This kind of study and this type of waste of funds is why the workers and the unions and the state do not trust the UC administration. They will pay large sums of money to circulate false information
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