UC decline

UCOP's recent memo to the Regents outlines the effects of years of ruthless cutting at the University of California (thanks to Bob Samuels for the pointer):  

• At UC Riverside, [students] will walk onto a campus where enrollment has grown in the last three years by nearly 3,000 students – many of them the first in their families ever to attend college – while at the same time the number of faculty has been reduced by five percent. The result: class sizes have grown by 33 percent. Introductory physics classes that used to average 95 students have exploded in size in three years to 573 students.   
• At UC Davis, students will find an acclaimed medical center that has eliminated all State supplemental support for clinical care. Just as the campus’ athletic program had begun to mature, four sports had to be eliminated to help meet the need to make $106.5 million in cuts in four years.
• At UC Santa Cruz, students will be provided with 84 fewer course offerings and their class sizes will have spiked 33 percent. The student-faculty ratio has exploded by nearly 15 percent, and the campus lacks funding for 125 faculty FTE – 14 percent of its faculty positions. Yet for all the cuts, the campus still faces a daunting $38 million budget gap.  
• UC Santa Barbara has over 1,000 more students than it did three years ago, but the number of staff has declined by 450 (nearly 11 percent) during that time, and the faculty has remained the same size. The results are fewer student services, larger classes and discussion sections, and reductions and eliminations in many programs.   
• And across the system, pension costs alone will rise to $1.8 billion annually in the next five years – an expense that campuses did not have to shoulder as recently as three years ago. If there is no increase in either State funds or tuition during this time, campuses will have to find the equivalent of funding for 7,000 staff or 3,900 faculty to fund this expense alone.
• At UC Berkeley, despite its more mature capacity to raise private funds and attract non- resident students, the campus forecasts that – even with stable fee increases – it could face at least a $200 million budget gap within six years due to exploding pension contribution costs.  

Similar conditions exist on every other UC campus – from UCLA and San Diego to Merced, Irvine and Santa Barbara. The University faces an unprecedented threat to academic quality.   While this is a welcome change from the fiction that the University can absorb whatever cuts the state throws at it, the memo engages in some measure of wishful thinking when outlining possible solutions to the current dire situation, from increased indirect cost recovery to private philanthropy. 

Perhaps the most promising avenue is the multi-year funding agreement with the state included in the Governor's latest budget. But the agreement is contingent on voters' approval of the Governor's "revenue-enhancing initiative" this fall, failure of which would result in another $200M mid-year cut. 

Regents' retreat

Only for the fourth time in history, the UC Board of Regents has cancelled a meeting, apparently out of concern that protests planned concomitantly with the meeting might turn violent. Oh, c'mon, really? I am sure a few baton pokes from UC PD officers would have sufficed in keeping the distance between the ragged and smelly students and the highest officers of the University.

No clue

It looks like nobody really has any clue as to how to go about addressing the University's financial problems. As widely reported, UCOP came up with a scheme whereby tuition would rise by 16% a year for the next four years (which compounds to 81%) unless the State steps in with yearly funding increases of 8% for the next four years. As anybody can imagine, this is not likely to engender warm and fuzzy feelings towards UC in those that are left as UC's only constituency and potential supporters, viz. the students and their families. Supposedly preoccupied by the fall-out, the Regents have swiftly acted with typical Regental drive and determination – and formed a commission with the task of exploring private donations as a source of external funding. The idea behind such a bold undertaking is that UC has traditionally contributed to the economic successes of California by supplying a steady stream of skilled and educated labor. California business ought to be willing to contribute to the University's bottom line in order to secure such a competitive advantage in the future as well. What this line of thought seems to have missed, though, is that there does not appear to be any reason why big business would be willing to pay in California for resources it can get for free in Mumbai – testifying yet again to the wisdom of Clark Kerr's vision characterizing a public supported education as "bait to be dangled in front of industry, with drawing power greater than low taxes or cheap labor." Perhaps even more disheartening is the fact that in all this the faculty and their official representation, the Senate, is mostly notable for their silence.  

UC Disorientation Guide

Reclaim UC  carries a "disorientation Guide" for students entering UC this fall:

As you go from class to overcrowded class this fall, you’ll want to forget that tuition last year was around $1,800 less than you’re paying now. Continuing a 30-year trend, the UC Board of Regents gathered in cigar and gin-soaked boardrooms over the summer to raise our tuition by 17.6% and lay down plans for further increases in January, or maybe just raise tuition 81% over the next 4 years.

[...]

The UC Office of the President (UCOP) never tires of reminding us that tuition increases are the recession’s fault or scolding us that Californians are just unwilling to spend on education in hard times; this is a strange excuse though, since state funding has been decreasing while tuition has been skyrocketing since the early 1990s. [...] As it happens, in 9 of the past 10 years tuition was raised – well before the 2008 recession began; UCOP’s insistence on the necessity of this recent series of tuition increases has so many logical fallacies that if it were an assignment, it’d get an F (assuming, of course, that the overburdened TA grading it even had time to pay attention to it). Tuition hikes and budget cuts – at all levels of California higher education – are part of the decades-long process whereby the richest assholes in California (and the greater US) intend to make private what few institutions remain in public hands.

Even if you slept through math in high school, UC tuition increases aren’t difficult to calculate – just add a few zeros every few decades: since 1975 tuition has gone up 1,923% or, if you’d prefer to adjust for inflation, 392% (from $700 to over $12,000 per year)! Minimum wage in California, by contrast, when adjusted for inflation, has stayed roughly the same for the last 40 years, while the median family income has continued to fall since 1973. Most people in California make less money today, yet pay much more for education: for families struggling to pay rent, mortgages, car payments, etc., education becomes a luxury good. To make matters worse, financial aid packages meant to help low to middle income students attend the UC, heavily depend on students working part-time in an economy with a staggeringly high unemployment rate and very low entry- level wages; furthermore, it relies on students taking out thousands in loans that, most economic experts agree, will lock us into debt for the rest of our lives. Indeed, many economists believe that student loans will be the next credit bubble to burst, perhaps wreaking more destruction than the recession of 2008. Because there aren’t enough jobs for everyone who graduates, student loan default rates are nearing 10% – but, unlike other loans there’s no way out for student borrowers. Sallie Mae and Bank of America can take your paychecks and your children’s paychecks until they get back all their Benjamins, and then some.

Read the rest of it, here.

Six hundred and fifty

That's the size of the cut (in millions) that UC is being required to take with the Governor's new budget, with possibly another $100 million if the optimistic revenue projections built into the budget do not materialize. (CSU and CCs will also get similar reductions – the Governor's budget includes almost 12 billions in cuts to services.)

Having averted the worst-case scenario (a total reduction of $1 billion to UC), there is a temptation to sit back and enjoy the summer. But in fact (unless I am mistaken, I didn't check) $650 million is the largest cut the University has been required to take in a long time. Did Arnold ever do anything remotely approaching this?

Of course the Regents have announced that any reductions above the $500 million in the January budget will come from tuition increases. So the UC faculty can sit back, take it in stride, tell each other there is nothing they can do, and that this, too, will pass.

Last one out.

If you are not following the discussion over at Remaking the University on the presentation by Patrick Lenz and Nathan Bostrom to the Regents, well — you should. It seems that for once the Regents got the unvarnished truth about the financial state of the University (although see Bob Samuels' letter to the Regents for a different take).

Here is the bottom line: assuming only 1% year-over-year revenue increases from enrollment growth, 2015-16 revenue for UC will be around $5 billion, but costs will be around $7.5 billion in 2015-16, giving a gap of $2.5 billion (and that's optimistic: assumes tax extensions will be on the ballot and approved by the voters, limited increases in utility costs, etc). A number of measures can be implemented to reduce the deficit: the mythical $500 million in administrative efficiencies, better indirect cost recovery from funding agencies, tuition increases at the professional schools, more out-of-state students. Such savings and revenue increases are projected to add to about $1 billion.

So, how does the University go about closing the remaining $1.5 billion gap projected for 2015-16? There are only two sources of revenue left: state funding and student tuition. State funding would have to increase by 12.4% a year over the next four to five years to close the gap, or tuition would have to rise 18.3% each of those years. Or you could mix-and-match, with, say, 5% increases in state funding and 12.6% tuition increases. 18.3% tuition increases over 4 years, as pointed out by Bostrom in response to a question form a student Regent, compound to 95.85% — double the current levels.

It's clear that the University is out of options. Even the most draconian measures would only go a small part of the way towards filling the $1.5 billion gap:

• Increasing the student-faculty ration from 21.1 to 1 to 22.9 to 1 (a 9.1% increase) would save about $100 million. Do it 15 times, and you've closed the gap.
• Replacing 1,100 tenure-track faculty position by non-tenure track faculty, would also save about $100 million in salary and benefits. Therefore, replacing 16,500 TT faculty by lecturers would close the gap. 
• Eliminating 1,280 staff positions would also save $100 million. You get the picture.

Lenz and Bostrom pointed out that cuts are being "disproportionately" taken at the administrative level on the campuses. That might well be true. But looks like we are well past the point were significant economies can be achieved this way (much less the mythical $500 million). As much as we would like to see extravagant administrative salaries cut to size, the truth is that there is not much money there altogether. And in fact the cuts are pouring all over the place: more than 4,400 people have already been laid off (with more coming) and 3,700 vacant positions have gone unfilled. And my own department's instructional budget, used to support the graduate students with teaching assistantships and readerships, was just cut 25%. We are at the point were the mission of the University is being seriously jeopardized.  And did I mention that the budget of Corrections & Rehabilitation is not being cut, and that the oil severance tax has disappeared from the horizon?

So things are definitely not well at UC. The last one out, please turn the lights off.

Dump Crane

The Council of UC Faculty Associations is asking UC employees to sign a petition asking Governor Brown not to appoint David Crane to the UC Board of  Regents, in support of Senator Leland Yee's opposition to Crane's confirmation as Regent. Appointments to the Board of Regents are for 12 years, and Davis Crane would thus serve until the end of 2022. CUCFA argues that David Crane is not the right person for this job. If you hold a similar opinion, this link will allow you to join with the opposition by electronically signing a petition to be sent to Governor Jerry Brown and Senator Yee.

The Regents and the future of UC

The Regents are meeting today in San Diego, to hear a gloomy report from UCOP concerning the budget. People are talking about massive layoffs and a "shrinking university". Let's hope that they set out to do this in some remotely intelligent way: cutting across the board, as we have already said, is the absolutely stupid way to cut.

I am also amazed that people are taking these cuts in stride, including people who howled at Schwarzenegger's budgets. This is far worse than anything Arnold ever tried. And just because he's a Democrat and dated Linda Ronstadt does not mean Jerry Brown gets a pass.

UC faculty

At their January 19 meeting, the Regents will receive (and hopefully discuss) the biennial Report on Faculty Competitiveness.  It makes for very interesting reading, at a time when the University faces perhaps the most daunting challenges in its history, with the new Democratic Governor bent on disestablishing UC as a State-supported educational institution.

It's clear that the University stands or falls with the quality of its faculty. It's the faculty that teach the classes, carry out research, obtain the grants, perform public service, push innovation, etc. The document to be presented to the Regents has some telling data about UC faculty. Here are honors and awards earned by UC faculty

• 56 Nobel Prizes
• 7 Fields Medal (Mathematics) 
• 60 National Medal of Science 16 
• Pulitzer Prize 
• 71 MacArthur Fellowship (“Genius Grant”)

 Even looking only at current faculty the record is equally impressive:

• 377 members of the American Academy of Arts & Sciences
• 650 members of the American Assoc. for the Advancement of Science 
• 125 members of the Institute of Medicine 
• 117 members of the  National Academy of Engineering 
• 245 members of the National Academy of Sciences 
• 56 faculty members of the Howard Hughes Medical Institute (HHMI)

Here is a breakdown of the composition of the UC faculty:

UC faculty have been getting older, reflecting the end of mandatory retirement in the 1990's, as well as continuing difficulties in recruitment:

At the same time, the increasingly old faculty are teaching more students, with less resources:

It is then not surprising that UC is feeling the heat of competition from the privates, who uniformly look to raid UC's most  prominent faculty. As the report puts it,

These fairly static demographics provide the context for present challenges in the recruitment and retention of UC faculty.  [...] At a time of reduced State support, growing enrollments, and a steady stream of faculty separating from the university, however, campuses are increasingly concerned about maintaining faculty quality.

And of course, faculty salaries continue to lag far behind (about 11.2%) those at peer institutions:

The report comments that "current lags are very likely higher because some of the comparators have continued annual pay increases. In addition, beginning April 2011, UC employees will have a portion of their salary redirected into the UC Retirement Program," yielding projected "lags  of six percent for Full Professors, nine percent for Associate Professors, and seven percent for Assistant Professors" (with 5% UCRP contrbutions).

UC has long prided itself for the faculty salary scales, which are supposed to encourage productivity; the scale are now meaningless as a full 65% of general campus faculty are now off-scale. The data on the salary lag above reflect actual salary; the official scales lag even further behind the comparison group (interesting tidbit for those of us receiving on-scale salary and suffering the effects of the "loyalty penalty").

It's no surprise that tenured faculty tend to leave UC, even if salary and benefits are structured to disincentivize such moves. And faculty move pretty much to the same set of high-quality institutions where they initially hired from: Stanford, NYU, USC, Columbia, Michigan etc. (see the document for a list, 640 in the last 10 years).

The report concludes that

To remain leaders in faculty recruitment and retention, UC will need to enhance salary and continue innovative approaches to designing faculty careers for the future.  There are clear warning signs that the University must be nimble in this work. [...] The University should plan to address both the needs of its long-serving, productive faculty and the expectations of its future faculty.  There are budgetary implications for improving faculty salaries and benefits, and for hiring new faculty at a rate that keeps pace with past and future enrollment growth and increasing faculty retirements, but these must be weighed against the costs of losing current faculty and of not being competitive for top recruits.

What else did the Regents do?

Well, we know the Regents increased student tuition by 8%, and we know that one UCPD oficer drew a gun on students protesting the fee increase (UCPD also proceeded to take down legally posted fliers on the Berkeley campus denouncing this extreme over-reaction to the student protests — so much for the First Amendment).

Less known is that the Regents also proceeded to approve total compensation of $481,000 for the Vice Chancellor of Research at UC Davis, an increase of $243,600 over the compensation previously approved for this position. Executive VP of Business Operations Nathan Bostrum justified the appointment by pointing out the plight of UC's senior managment:

If you look at our senior management, they're grossly underpaid relative to the market. Our chancellors are 22 percent under market relative to other executives.

Something is rotten

Not, as Marcellus would have it, in the state of Denmark, but with the Board of Regents. A recent article by Peter Byrne over at blog.spot.us details the conflict of interest of several Regents, including the Governor himself, in the way the University invests its endowment and pension fund portfolios.

The conflict of interest is perhaps most obvious in the case of Paul Wachter, CEO of Main Street Advisors as welll as longtime personal friend and financial adviser to Gov. Schwarzenegger. It is in the latter capacity that Wachter is in charge of Schwarzenegger's blind trust. Among the Governor's assets that are not in a blind trust is "over $1,000,000" in stock of Dimensional Fund Advisors — and Regent Wachter similarly owns, according to his financial disclosure, "over $1,000,000" in DFA stock. (No upper limit is specified in either case on the disclosure forms.)

Interestingly, since 2004, the University of California Retirement Plan has invested over a third of a billion dollars in a DFA "emerging market fund." The original investment of $226M in 2006 was raised to $329M in 2007, although the value of UC's investment  plummeted to $151M (a drop of over 50%) by the end of 2008. But we should rest assured that the value of Schwarzenegger's and Wachter's investment in DFA was shielded by the large management fees DFA charges its investors.

As Byrne puts it,

it is remarkable that Schwarzenegger and Wachter allowed the UC Treasurer to invest hundreds of millions of public dollars with an investment management firm which they partly own. The regent’s investments with DFA were not a secret: they was publicly reported to the board. And Schwarzenegger’s and Wachter’s large stake in DFA has long been a matter of public record, so the Treasurer could easily have refrained from investing in DFA.

We had already commented on the shady ways in which UC manages its investment portfolio, and this seems just further confirmation.  All the glorious details, including some possible conflict of interest of former Regents Chair Blum. aka Mr. DiFi, in the management of CALPERS's investment fund, can be found over at blog.spot.us.