Jerry Brown Releases Plan for Higher Ed

Jerry Brown’s recently released plan for education has a few good vague ideas sprinkled amongst some very bad notions. Starting with the good, Brown does recognize the problem of increasing tuition due to the decrease in state funding: “Recent state budgets have raised tuition drastically, reduced the number of new students--as well transfers from community colleges--to CSUC, cut class sections so that students cannot get basic classes they need, and driven good professors to other states. Students are dropping out because of high costs and the extended time needed to finish. California’s historic public university research base is declining.” Not only does Brown stress that the reductions in state funding have led to higher tuitions and fewer classes, but he also laments the loss of professors due to budget reductions.

Is first solution to this problem is to following the current governor and demand that money being spent on prisons is transferred to higher education: “We must also reverse the decades long trend of transferring state support from higher education to prisons. We can do this without sacrificing public safety. For example, as Attorney General, I recently blocked a proposed $8 billion prison hospital expansion—which was unnecessarily expensive and which would have added substantially to our state’s deficit. By relentlessly pursuing similar cost savings, we can channel needed funds to our higher education system.” The problem with this solution is that it is hard to imagine how it can take effect without changing the Three Strikes law and major drug decriminalization.

The next solution that Brown proposes should scare all of us. Like the UC upper administration, Brown endorses online education as a solution to many of high ed’s fiscal problems: “ The introduction of online learning and the use of new technologies should be explored to the fullest, as well as extended University programs. Technology can increase educational productivity, expand access to higher learning, and reduce costs.” Brown’s take on distance education recycles all of the questionable premises that drive the current UC initiative. In this naïve assessment, Brown thinks that access can be increased and costs deceased by some magical form of high-tech efficiencies. I have already written why the result of this process may be to increase costs, produce more work for faculty, and lower the quality and reputation of the university’s education.
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The other great fantasy solution that Brown copies from the UC Commission on the Future of the University is to increase the number of transfer students: “Transfer courses should be closely aligned with, and accepted by, the CSUC and UC systems. For example, transfer students are often forced to take redundant courses to graduate from the CSUC system even though they have completed equivalent coursework in community college.” As I have previously argued, increasing the number of transfer students will only decrease the funding of the university since most of the UC’s profit is made from lower-division, high-enrollment courses that transfer students do not have to take. Of course since Brown, like most of the UC administrators, does not actually understand how the UC makes its money, all he can do is propose unrealistic and unhelpful suggestions. However, we must keep in mind that the other candidate is actually much worse. In other words, we face another election of holding our collective noses while we vote.

Another University Fights Back

Check out this great video by professor Eva von Dassow from U. of Minessota. No, that is not me in drag, but she could easily be speaking about the UC system. She discusses how a small reduction in state funds is being used to justify major changes in the allocation of resources. Like the UC system, activites that make money are being supported, while basic educational and research activities are being starved. In her video, she makes the following important observation: "those programs engaged in the production of knowledge that is readily turned into the money are the targets of investment while the rest are to be downsized into an efficient credit and degree factory.” She also mentions that the university’s revenue has actually gone up, but still they are making dire cuts and forcing faculty and workers to do more for less.

In an interview with Inside Higher Education, von Dassow adds that the new budget cuts "leaves undiminished the numbers of vice presidents, not to mention the salaries of coaches. No, these highly-paid positions are not to be reduced. Rather, the university must shed faculty.” In the UC’s case, the loss of faculty is happening covertly by not replacing retiring professors and not rehiring lecturers; meanwhile the number of administraors keeps going up as the cost of administration increases. Even with recent efforts at administrative efficeincy, the university shows where its values are by continuing to hire more high-level, high-paid bureaucrats.

In response to von Dassow’s comments, a university spokesperson told Inside Higher Ed, “"Professor von Dassow's perspective is one of many faculty perspectives at the University of Minnesota. We certainly appreciate her taking the time to express it. The University Senate overwhelmingly supported the president's plan for temporary pay cuts and his operating budget was unanimously supported by our Board of Regents." Doesn’t this sound familiar: yes, the university values the input of respected faculty members, but sorry, the regents and the official committees are the only ones that really matter, and they really like what we are doing.

As I have been arguing in this blog, the next big fight will be over online education, and here, we will see if the faculty in the UC system have any power or values. The UC administration has decided to simply bypass the faculty senates by taking control of the online initiative. This plan, which seems modest at first, will give upper-management the ability to control who teaches, what gets taught, and how it is taught. In fact, Dean Edley has argued that an “army of graduate student instructors” will man the courses, which will be initially funded by outside private sources. The next step will be to expand the project for online degrees, and at that point, there will be no difference between education and mass marketing.

I ask faculty to speak loudly against this administrative takeover. The question is not so much whether the quality of the education will go down (it will) or that the university will generate extra funds (it won’t), the question is who will determine the structure and content of our classes and what will these changes say about our values and interests.

UC Regents Agree to Blame Sacramento and Congratulate Themselves

One of the most annoying parts of any UC Regents meeting is the constant, time-consuming ritual of self-praise. Near the start of the meeting on July 13th, Chairman Gould announced that he would like to praise the board for their successful effort at turning anger away from Oakland and aiming it directly at Sacramento. In other words, the head regent wanted to make sure that people blamed the state and not the regents or the Office of the President for any of the UC’s problems.

Gould later responded directly to my public comment concerning the university’s loss of $23 billion in investments during 2008-09. He flatly said, “Over the last twenty years, our investments have outperformed our peers.” Not only is this statement completely false, but it reveals the defensive and misguided nature of the regents’ thinking.

Another great example of defensive group thinking occurred during the discussion of UC admission statistics. After stating that the system ended up with 2,000 more transfer students than they wanted, a regent exclaimed that this high rate of transfers shows that the Master Plan is still working. No one questioned why none of the admission targets were met, but the VP of Budget did warn that this level of over-enrollment means that the UC system now has 15,000 students that are not being funded by the state.

A very uncomfortable moment occurred when the ethnic breakdown of new admits was being discussed. On one of the charts, it showed that the percentages of new freshman who are Asian American, Latino/Chicano, African American, and American Indian have all gone up; however, next to Caucasian, there was no arrow. A regent asked why the percentage of white students didn’t also go up? I thought to myself, doesn’t he realize that you can’t have the percentage of all of the groups go up; after all, some group has to go down. Yet, in the delusional thinking of the regents, they should be able to increase every group, while they commit themselves to decreasing undergraduate enrollments.
One regent even ventured that the result of increasing student fees was that there was more financial aid available, and so there are now even more low-income students. No one stated the obvious that someone must be losing out.

Of course, the magic bullet presented at this meeting to solve both the budget problems and diversity issues was online education. In Dean Edley’s showy presentation on how the UC can use online courses to democratize elite higher education, he claimed that digital education is the new civil rights issue, and he ended his presentation with a slide stating “Si Se Puede.” I am sure that Cesar Chavez used this slogan to tell his people that they would soon have access to a high-cost, low quality educational option.

After Edley’s presentation, there was a press conference, and I asked him how UC is going to offer high-quality online education to low-income students if these are they very students who do not have broadband, fancy computers, and the needed software. He replied that the UC would have to provide students with new computers and broadband access, but it would only cost a small drop in the bucket.

Edley also announced that he has been going around with the governor asking private donors to support the pilot program that he hopes to roll out this Fall. I asked him if he was afraid that the donor’s might have a different agenda than the University of California, and he assured me that none of the gifts will come with any strings attached. I didn’t get to ask him about regent Blum’s business interests in online education, but it is clear that the regents are feeling defensive concerning recent media exposure of possible conflicts of interests.

One of the central ways that the regents and UCOP are trying to polish their public image is by showing how they will save money through administrative efficiencies. In a major move, the regents granted President Yudof the power to force campuses to adopt common systems and practices. It was clear that the Chancellors in the audience were not happy about their sudden loss of power, but they had to suck it up as the regents extended Yudof’s executive reach.


Here is my final conclusion; since the regents have no understanding or interest in actual education, they turn their attention to other areas like new community outreach programs, online education, green technologies, and diversity issues. Not once, during two long days of discussions, did I hear anyone touch on the subject of providing high quality education and research. It is clear that the faculty, students, and unions have to change the conversation and interupt the love affair between the regents and the Office of the President.

Alternative Commission to Present Survey Findings At Regents Meeting on July 15th

Throughout the year, faculty, students, and employees have been meeting at UCLA to discus the UC fiscal crisis and the Commission on the Future of the University. We decided to form an Alternative Commission because the official commission did not have any union leaders, librarians, and lecturers as members, and the working groups had very little student representation.

One of the first activities of the Alternative Commission was to create and distribute a survey regarding the official commission’s recommendations and other related issues. So far, over 1,000 people have responded to the survey, and we will present the findings on July 15th at the UC Regents meeting in San Francisco. A full copy of the report on the survey can be accessed here.

A major finding of the survey was that most of the students have very little knowledge or understanding about the creation and role of the commission. Moreover, when we outlined the central commission recommendations, most of the students and faculty gave these solutions very low ratings. In fact, we asked people to grade the commission recommendations, and we compiled the following results:

1) The lowest rated recommendation was to reduce the teaching staff by 10%. The vast majority of responses rated this proposal as an F.

2) The second most unpopular idea was to eliminate some majors and to get rid of majors that are duplicated on different campuses. Once again, almost everyone gave this recommendation an F rating.

3) Another idea that did not garner much support was the proposal to schedule yearly fee increases of 10-15%. It is important to note that many people feel that the UC does need to do something about its finances, but students and faculty resist the idea of making students continue to pay for the decrease in state funding.

4) Responders also rejected the notion of different fees for each campus, and there was a strong desire expressed to maintain the unity and equality of the system by holding onto a single fee structure.

5) We also asked people about the idea of having more online courses, and once again, the vast majority of responses were strongly against this recommendation. Many people wrote comments on this idea, and they stated that the move to online education could wind up costing the university more money, while lowering the prestige and quality of UC instruction.

6) We also asked people about the idea of increasing professional fees by 15%, and while this recommendation did receive some positive support, most people felt it would hurt the students who did not pursue the most profitable occupations.

7) Another recommendation that did receive some positive support was the idea of increasing the number of out-of-state students. It is important to note that the people who did support this move wanted to make sure that the number of in-state students also increased.

8) Finally, the recommendation that received the highest support, somewhere in the D+ range, was the notion of three-year degrees. Most people thought that this was a strange idea since so many students can not graduate in four years, but some thought the three-year degree idea showed promise if it could be done correctly.

The UC Commission is Asking the Wrong Questions and Giving Bad Answers

The key to the future of the University of California relies on our ability to answer several major questions: 1) How much does it cost to educate each graduate and undergraduate student each year?; 2) How much money is lost or gained by externally funded research; 3) How much will it cost to fund the pension and retiree healthcare?; 4) How much revenue is unrestricted and can be shared between units?; 5) How much waste is there in the system?; 6) Is there a way of improving educational quality and decreasing costs?; and 7) Can the UC pursue a more stable and effective investment strategy? While some of these questions are touched on by the Commission on the Future of the University, most of these essential issues are ignored or misrepresented.

On the positive side, the university has opened up the question of cutting waste and excess by proposing to save $500 million through some vague process of centralization and cost reduction. However, these proposals do not directly address the question of the increased number of administrators and the rapid rise in their compensation packages. In fact, during the time of our “fiscal crisis,” people at the top have increased their earnings, while everyone else lost money.

A hopeful move by the Commission is to look at the rate the university charges external research grants for indirect costs. The commission claims that many of these grants are losing money and that the university should be more aggressive in bargaining for a higher rate of support from external sources. What no one knows is which grants make money and which ones lose; moreover, due to the abstract way of calculating indirect costs, it may be impossible to determine the profitability of most research projects. There is also the question of whether the university wants to base its research decisions on economic criteria.

One reason why this issue of grants is so important is that many faculty members in the humanities and social sciences feel that their budgets are being robbed to pay for expensive scientific research projects. One again, due to the decentralized nature of the UC budget, no one knows if externally funded research is being subsidized by high-enrollment undergraduate courses. Yet, what we do know is that money generated by undergraduate instruction is going somewhere other than instructional budgets.

This question of undergraduate instruction brings us to the unanswered question of how much does it actually cost to educate undergraduate and graduate students. Since there has been no effort made to answer this question, many of the Commission’s recommendation are based on unclear assumptions. For instance, the UCOP appears to be pushing for a decrease in undergrad enrollment and an increase in graduate enrollment, but they have never studied what this change would cost. The Commission has also pushed for more transfer students and three-year degrees, but it is unclear if these programs will save or cost money.

According to my studies of UC salaries, class sizes, and course loads, the university makes a large profit on each undergraduate student and loses money on each graduate student, and thus it would be economic suicide to decrease undergraduates, while increasing the number of graduates. Even if one believes that the key to the future of the UC is to focus on graduate education, one should have some idea about the costs of this move, and yet no one is basing their recommendations on actual numbers or facts.

The speculative nature of the Commission and the Office of the President tells us that we are a long way from budgetary transparency, and the main reason for this lack of transparency is that the university has to simultaneously tell its bond raters that it is in great fiscal health, while it tells everyone else that it is deep in a fiscal crisis. By claiming a large budgetary hole, the university can impose drastic cost-cutting measures, like furloughs, layoffs, and increased class sizes; meanwhile, it increases its assets by diversifying its revenue streams.

Like most research universities in America, since 1980, the UC has made up for its loss of state funding by increasing tuition and bringing in more funds from research, services, and investments. One of the problems with this transformation is that universities claim that they cannot share the profits of the non-state-funded units with the state- and tuition- funded instructional budgets. The result of this budgetary system is that money is drained from educating undergraduates in order to support supposedly profitable units, and making matters even more complicated, is the fact the universities often invest their endowments, pensions, and operating cash in risky investment vehicles.

If we look at the amount of debt the UC has recently taken on ($13.2 billion) and if we account for all of the UC’s investments in the stock market, hedge funds, real estate, private equity, and securities ($65 billion as of March 2010), we see that its yearly budget of $20 billion is dwarfed by its financial stakes of $78 billion, yet none of these statistics have been presented to the working groups of the Commission. Instead, the university has reiterated dire predictions concerning the cost of the pension plan and retiree healthcare. In one of the their graphs presented to the Commission, they estimate how much it would cost the university to increase its current pension contributions of 4% of salary to 22% by the year 2019. This increase could overwhelm the entire system, so the UC has added that it plans to save $310 million a year by restructuring post-retirement benefits; as far as I can tell, this is the first mention of estimating the costs of changing retiree healthcare.

Since all of the members of the Commission’s working groups were given presentations on the UC budget by the Office of the President, we can be sure that driving the Commission’s recommendations is the idea that the university has to cut educational costs to make up for the decrease in state support and the increase in retirement costs. At no point were the Commission members briefed on the UC’s investments, debt, or actual instructional costs. As Aristotle argued, if you start off with faulty premises, there is no way you can arrive at correct conclusions.

The UC Gets Mixed News from the Legislature

The state assembly and senate have responded to the governor’s request to increase the funding for the UC system by $305 million. While the assembly supports the increase, the senate has stated that they will only endorse the augmentation if the state brings in at least $2 billion in new General Fund revenues above the May Revise level. In other words, unless the state has a major increase in revenue, the senate will try to block the new money.

The assembly has also supported additional funding for the UC system so that the scheduled student fee increase of 15% can be brought down to 5%. So far, the senate has not decided on this fee decrease, which would cost the state $200 million.

Finally, in response to the UC’s request that the state fund the employer contributions for the pension, the assembly supports the governor’s idea that general fund allocations can be used for the pension. However, the senate decided to reject this new language. It looks like we are in for a long summer battle over the state budget.

Does UC Want to Invest Like Harvard?

I have a Huffington Post article on how several schools in New England have followed the same high-risk investment strategy that the UC has pursued for the last several years. According to the Tellus Institute’s study of Haravard, Dartmouth, Brandeis, MIT, Boston University, and Boston College, by moving their investments from more stable assets to volatile gambles (private equity, real estate, and hedge funds), these universities have produced a growing income inequality at their campuses. Moreover, since they have now been forced to stop ambitious expansion projects, the surrounding communities have been devastated.

An important lesson that the University of California should learn from this analysis is that the investment strategies of hired traders should be closely monitored; this study also shows that the trustees and regents of these wealthy institutions often have a huge conflict of interest. Since many of the people overseeing universities now come from the world of speculative finance, they are unlikely to shift money into more stable forms of investments. Moreover, due to the tax-exempt status of these schools, they are more prone to engage in high-risk trading.

Another issue discussed by the Tellus report is that since these schools pay very little taxes on their huge real estate holdings, they end up impoverishing their home towns and cities. Furthermore, all of these schools continue to increase their huge income disparities as money flows to the top, and low-paid workers see their salaries stagnate.

While this study does not look at pension investments, most of their finding can be applied to the UC retirement situation, and the central lesson is that there needs to be more faculty and employee oversight over risky investment strategies that cater to the interests of wealthy trustees and regents. As the stock market continues its rollercoaster ride, universities are motivated to seek out high-risk investments in order to make up for past losses; this is truly a recipe for disaster.