CalState vs. Harvard

In the meantime, it appears that a middle-class student attending Harvard University will end up with a lower bill than one attending a California State School. Go figure.

Backroom Deals

This past Monday, after hearing the plight of students for never-ending tuition hikes and their outrage at the trampling of their constitutional rights at Berkeley, Davis and elsewhere, the Regents of the University of California promptly reconvened to a separate, smaller room for the non-public portion of their meeting, where they provided yet another resplendent  example of their vision, leadership, and courage in steering the UC ship in these stormy waters.

Once outside of public scrutiny, the Regents promptly proceeded to approve 9.9% pay raises for three vice-chancellors (UCLA, UCI, UCSF) as well as for a number of university lawyers. But the lottery winner was indisputably UC Davis general counsel Steven Drown who got a whopping 21.9% salary raise (only UCDMC chief operating officer got a bigger raise, but medical center employees' salaries benefit from the revenue the bring to the University). Mr Drown was noted during the recent "events" at UC Davis for his very visible absence while the students' first amendment rights were being covered in orange pepper spray.

In the meantime, it looks like a section of UC Davis faculty, mostly from the sciences and engineering, have launched Operation SCA ("Save the Chancellor's Ass"). One is reminded of not too distant proceedings at Irvine, when Chancellor Drake hired, fired, and re-hired Law School Dean Erwin Chemerinski, all in the same week. UCI science and medical faculty also rose en masse to save Drake's ass, quite possibly in return for Drake's saving their asses when the Medical School was selling body parts and fertilized human eggs on the black market.

What Katehi didn't say

As we know the Davis Chancellor addressed the 5,000 participants at the rally held today on the UCD quad: the full 2:44 minutes of her emotional speech can be viewed here. She apologized for Friday's "events" and vowed to work to re-gain the students' trust. That cannot have been easy, and it certainly took courage. But equally important is what she did not say. For instance, here is something many were expecting to hear:

The Chancellor will ask the Yolo County DA to drop all charges agianst the arrested students.

This is so obvious it is a no brainer, and yet nothing was said in this respect. Here is another one:

The Chancellor will make sure that all riot control equipment on campus is removed from possession of UC PD.

Again, nothing in this direction. Or one more:

The Chancellor will make an explicit commitment to safeguard free speech and other constitutional rights on campus.

The list could go on, including working with the students to reverse tuition increases, working with faculty to restore shared governance, respect the right of workers and staff to unionize and engage in collective bargaining. But none of that was forthcoming today. Perhaps tomorrow?

The dirty secret behind UC privatization

There is much to think about in Nathan Brown's remarks, delivered at the Tuesday day of protest, even if one does not agree with everything he says. In particular, his claim that in many ways UC likes to replace state funds with student tuition, seems right on the mark. State funds are restricted, and they can mostly be used for instructional purposes. Student tuition is unrestricted, and it can be used, for instance, as collateral for bonds intended to finance capital projects (a point Bob Meister has been making for quite some time).

Student Regents

Looks like the student regents have it exactly right: it's depressing.

OWS

The Council of UC Faculty Associations endorses Occupy Wall Street, and asks people to sign a support petition:

The social movement known as Occupy <>Wall Street (OWS) is growing and raising issues of direct relevance to the faculty, students and staff of the University of California including contracting opportunities and increasing debt loads for our students created by a system of privatized education and a refusal to provide high quality affordable public higher education. TheCouncil of UC Faculty Associations, on behalf of all UC faculty, is making a petition supporting OWS available for UC faculty to sign.

 The petition is available here.

OWS has been variously criticized for their lack of clear objectives, but in fact it seems to me the opposite is true. Two young participants being interviewed the other day, from different parts of the country, when asked what is that they wanted, were adamantly clear: they wanted to find a job, buy a house, start a family, and pay down their student loans. 

These are middle class dreams, and it's remarkable that this aspect of the social compact that has been in place for a long time, has finally unraveled, with the financial crisis putting the final nail in the coffin. Maybe this time around the revolution is a dinner party.

The mention of student loans is also remarkable, and one of the most jarring consequences of the crisis. High levels of student debt might have been acceptable during the good times, when the prospects of finding a good job after college were reasonable (even this is debatable, as it presupposes that higher education is only a private good). But it is a real racket now, with lenders and universities (public, private and for-profit) equally addicted to the student-loan money, while the Feds are just watching and untold numbers of students are getting screwed. (Student loans cannot be dismissed, not even by a bankruptcy court; this is supposed to make lenders more willing to lend, and make more kids go to college, but the absence of such protection does not seem to make mortgages or car loans any more difficult. Go figure.)

Finally, one of the more colorful slogans from OWS: "I'll believe corporations are people when the State of Texas executes one of them."

Negotiated Salary

For a long time, faculty in the Health Sciences have been receiving salary according to the aptly named  "Health Sciences Compensation Plan" (HSCP). HS faculty generate a sizable chunk of revenue for the University, and HSCP makes sure that they get some of it back in what the University calls a salary "augmentation." ("Augmentation" reminds one of a particular surgical procedure especially popular at, or around,  UCLA Medical Center. Go figure.)

There is nothing wrong with this, it is accepted and fair practice. HS faculty are collectively regarded as revenue generators and so they are all eligible for salary augmentation through HSPC. The University is now thinking of extending the concept to general campus faculty through a Negotiated Salary Program. In a memo detailing the proposal (link courtesy of UCLA Faculty Association), system-wide Vice Provost for Academic Personnel Susan Carlson outlines the motivation and some of the details of NSP.

NSP is intented to work pretty much like HSCP: faculty that generate external revenue would be able to negotiate some of that revenue back into a salary augmentation (typically paid, it would seem, as summer salary). Only funds that are not "state-appropriated" can be used for this purpose: "gifts and endowments, professional fees and fees in self-supporting programs, and [revenue from] contracts and grants" (the latter might run afoul of federal grant guidelines – we'll see).

Ostensibly the motivation for this is to address the notorious salary lag for CU faculty without resorting to "ad hoc state-funded off-scale salary increases in response to external offers" (fully two-thirds of all faculty now receive off-step salary) or to across-the-board increases in the salary scales. (The NSP program is not meant to supersede the University's recent commitment to a 3% salary increase or the 1.78% of payroll reserved for merits.) One aspect where NSP would differ from HSCP is that in the latter, as mentioned, all faculty are eligible, whereas in the former only small groups within a department, or perhaps only some departments within a school might be eligible, depending on the creation of "non-state-appropriated" revenue. As Carlson's memo points out,

A key factor driving the creation of the NSP is that on several UC campuses with Health Sciences schools, general campus faculty are considering appointments in the health sciences, often due to the flexibility of the salary benefits.

People can make up their own minds about UCOP's proposal. But one thing to keep in mind, though, is that there is an argument for carrying this to its logical conclusions: revenue is revenue, and funds that are state appropriated contribute equally to the functioning of the University. Among such funds, of course, is student tuition, which the University is bent on increasing in leaps and bounds. These are "private" funds – just ask the students out of whose pockets the money is extracted. One would then logically conclude that faculty that generate the most enrollment would also be allowed to retain some of the funds thus generated and pay themselves summer salary according to NSP guidelines. Money is money. Pecunia non olet. The English department faculty teaching writing to four hundred freshmen, doesn't she deserve her summer salary, too?

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.

Brown Kerr

That's Pat Brown and Clark Kerr, the architects of California's Master Plan now in tatters. The Economist has a piece on the "quasi-privatization" of California's public universities, quoting Kerr's point that universities are "bait to be dangled in front of industry, with drawing power greater than low taxes or cheap labour." According to The Economist, this privatization strategy (higher tuition and more out-of-state students)

retains pockets of excellence. But it also runs counter to the philosophy of the master plan, by pricing ever more Californian families out of a place. The state now ranks 41st in the number of college degrees awarded for every 100 of its high school graduates.

 Jerry's undoing Pat's work. Isn't there a Greek tragedy about that, or something?

The power of ten

Ever since the beginning of this blog, we predicted that the steady de-funding of UC by  the State, accelerated by the financial crisis, would have resulted in a serious strain on the system as a whole, and provided an incentive to follow the Michigan/Virginia model for those campuses that can (UCB and UCLA, essentially), while the remaining campuses would be left to fend for themselves.

Well, Cal has just announced that in spite of the most recent cuts, they are doing quite well, thank you, mostly because of the influx of out-of-state students (about one in three freshmen) and other "efficiencies" realized by following the prescriptions of the Bain report (the laying off of about 150 staff at Cal — it's easy to realize "efficiencies" this way, it's a lot harder to save money by allowing people to work to their fullest potential). 

In the meantime, UCOP has announced a program that would provide $140M to give non-represented staff and faculty a 3% pay raise. While the raise will be applied across the board, the the faculty component would only be available to faculty earning less than $200,000 a year (the vast majority of non-medical faculty) and it would be left to Chancellors to determine how best to apportion it for the purposes of "recruitment and retention." (The newly released report on 2010 compensation confirms that UC faculty salaries lag 12.8% behind those at comparable institutions.)

The proposal has generated a fair amount of criticism among the general public (Bruce Maiman is an example). Such criticism might be justified if UC still were the kind of public institution of higher learning that the State envisaged (and paid for) in the Master Plan. But in fact California has long ago decided that they are no longer willing to support an affordable, high-quality teaching and research institution open to all qualified Californians. The percentage of the UC budget paid for by the State has been shrinking for decades, and we are the point where only a fraction is taxpayers' money. A similar announcement by Stanford would not even make the news  — it's not public money. And, for better or for worse, this move by UCOP is also in large part financed through tuition money, just like it would be at a private institution.

Of course, the morality of raising tuition on the students to pay for faculty pay raises is questionable (retention of quality faculty at UC is in some sense a "public good" in that it benefits California in numerous ways). But California can't have it both ways: accept (or promote) de-funding the university while at the same time complaining about the way UC makes use of the money.

The Blue and Gold Scam

I confess that, like many, I was impressed by Yudof's raising the cap for Blue and Gold eligibility to $80,000: it looked a step in the right direction, intended to extend access to UC for the middle class, and a way to return to students some of the extra revenue collected through tuition increases.

But now, as Bob Meister makes clear in his analysis, the proposed increased cap is financed by revising the amount of "self-help" students are supposed to provide, and deducting such amount from their financial aid. In other words, eligibility is extended by reducing the amount provided to current recipients, at no cost to the University, who pockets the extra tuition revenue. A gimmick or, in the words of UC Financial Aid Directors, “a political plan, not a practical plan”. Unfortunately, this does nothing to improve our early assessment of Yudof's leadership.

Student fees to rise 8%

In an "open letter to California," President Yudof announced today that he plans to bring to the Regents a proposal for a further 8% increase in tuition for in-state students (on top of the 32% increase last year), bringing in-state tuition to a total of $12,150. At the same time, UC would raise the ceiling on the Blue and Gold Program from $70,000 to $80,000 a year.

Nothing unexpected, I suppose. CSU had already announced similar increases, and the State's "restoration" of some of the cuts from last year does not go nearly far enough. But one wishes that at the same time as the University asks students and their families to pay more to attend a UC campus, they would also make a commitment towards transparency and get the different constituency around the university (students, faculty, staff, etc) involved in a serious discussion of UC's financial situation.

Oh Canada

The College Board recently released new figures for college completion rates. The percentage of 25-34 year olds  holding college degrees especially attracted attention (Bob Herbert in the NYT, for instance):

The US, having long held spot number one in the world, has now fallen to number 12. But just as interesting is the fact that Canada, where higher education has long been subsidized, is leading with 55.8%. Annual fees and tuition for an arts and sciences degree are about CAD 5,000 at the University of Toronto (half as much as at UC), and about CAD 3,600 at McGill (about 1/3 of UC fees). If there ever was any doubt that tuition is inversely correlated with completion rates, this should give everybody pause.

Among the College Board recommendations:

Keep college affordable by controlling college costs, using available aid and  resources wisely, and insisting that state governments meet their obligations  for funding higher education.

UC Berkeley invests $300,000 for each student

We commented a few months ago about the hare-brained scheme at UC Berkeley to fund construction of the California Memorial Stadium and the new Athletic Center. UC was planning to pay for debt service for construction bonds at Cal Stadium by selling stadium seats at $220,000 each. We don't know how that is working out. But it appears that a similar scheme to fund the Athletic Center has run into some trouble.

UC's plan to pay for the Athletic Center was to float a $135 million construction bond, raise a similar amount through private donations, invest that amount in the stock market and use the returns on that investment to pay for debt service.

It was a good plan. Except that as David Downs reports in the Chronicle, the donations never materialized, and the first payment of $4.92 million will come due in a couple of years. It should be noted that Berkeley's intercollegiate athletic, which is supposed to be self-supporting, has in fact been losing money for many years, and had to be bailed out with several million dollars of campus general funds, and this before the Athletic Center fiasco. And the $135-million, 142,000-square foot, 4-story Center being build to house the lockers of Berkeley's football team will serve at most 450 students a year. That's $300,000 or 315 square feet for each of the 450 student-athletes using the Center.

Robbing Peter to pay Paul

The University of California was ordered to pay back $38 million in fees that were improperly charged to almost three thousand students at professional schools in LA, Berkeley, and elsewhere. Apparently the University admitted the students in 2003 with a commitment that they would be grandfathered into the fee schedule at the time of admission, only later to renege on that commitment and raise their fees by thousands of dollars midway through their degrees. The University has already lost similar suits, and in response the Regents have approved short-term fee increases at such professional schools to pay for the cost of the rulings. According to the  SF Chronicle, UC counsel Christopher Patti indicated that that might happen again if this latest ruling is not reversed in appeal.

In the meantime, as if almost on cue, at their next meeting in San Francisco this coming March 23-25 the Regents will consider a policy change that would allow professional schools to set their fees at levels comparable to similar schools at private universities. Currently professional schools are not allowed to raise fees above comparable public universities. The proposed policy change would just delete the word "public" from current policy.

The University of course has long considered students as a potential source of additional revenue rather than the constituency they are constitutionally mandated to serve (witness the 32% fee increase approved in November). What is particularly disturbing in this case is the insouciance with which UC proceeds to renege on firm commitments.

The fee increases are working

There has been widespread discussion of the University's priorities in raising student fees at the Regents' November meeting. We now see that those hikes had the desired effect: Standar&Poor's raised the rating for the University's general revenue bonds from AA-/stable to AA/stable. 

And the best value in public education is ...

... the University of North Carolina, Chapel Hill — at least according to a ranking by Kiplinger magazine. How far down the list does one need to go to find the first UC school? Well, UCSD is no. 11 and UCLA is no. 13, below SUNY Binghamton or SUNY Geneseo.

Kiplinger compiled the rankings using a weighted average of academic and affordability indicators, with academic indicators worth twice as much as affordability. In other words, the ranking is supposed to reflect value. Since UC is still way ahead of the schools ranked above it in academic quality, it's the cost of attending UC that must be dragging down the ranking of UC campuses. And the ranking uses this year's tuition figures, before the increases approved by the Regents this past November go into effect. In-state total costs for attending UCSD are listed at $22,900, going down to $11,046 after aid. That is still a pretty penny for California families.

The dangers of bondage

Melissa Fabros writes in the RGE Monitor about the pros and cons of universities' (public and private) borrowing binge. A consequence of the extensive reliance of bonds (traded on the municipal bond market) is that borrowers have been bending over backwards to follow Moody's "roadmap" for universities that want to achieve or maintain AAA/AA1 rating:

Moody’s recommendations highlight tuition hikes, cost cutbacks, online education delivery and direct borrowing as means for universities to survive the Great Recession with their credit ratings intact.

Sounds familiar? This is very clearly the strategy that UC has been following over the last 5 or 6 years, and also the one that is being markedly accelerated in these difficult economic times. Interestingly, the University of California, with about $1.3B in bonds, ranks second only to Harvard (with $2.5B) among institutions that have embraced the bond market. One of the conclusions of the article is that

While seeming a sure win for investors, higher education, given cuts in faculty and services on top of tuition increases, appears to be an increasingly risky bet for students, faculty and staff. 

The problems inherent in the strategy is that in order to borrow universities have to maintain a high rating, which in turn requires raising tuition (which, as we know is being pledged as collateral), cutting staff and faculty, and increasing class sizes. So the question being asked is

how will increased revenue, which will be needed to service the loan, be generated by an institution with reduced capacity?

While reliance on the  bond-market might be (and it has been) successful in the short run, it is fraught with perils as a long-term strategy — not to mention the fact that, especially in the case of a land-grant public institution like UC, it seems to embody exactly the wrong kind of priorities.

More on the California "brain drain"

Capitol Weekly has a piece on expected student brain drain. In 2007-08, for the first time ever, there were more California students going out of state for college than there were out-of-state students coming to California for the same purpose. The trend will only get steeper with the recent hikes in tuition and fees accompanied by enrollment cuts at UC and CSU.

Any similar trend among the faculty is still perhaps too small to detect. But the writing is on the wall. People used to come to the University of California, in spite of salaries historically lagging 10% to 15% behind those at comparable institutions, because of its public mission, the tradition of faculty governance, its outstanding retirement system, and the endless sunshine. If recent events are a signs of things to come, all that will be left is the sunshine. And if we allow global warming to do its work, there will be palm trees growing in Toronto at some point, so even that comparative advantage will be gone.

Not an unexpected outcome, but ...

It comes as no surprise that, in spite of widespread protests, the Regents approved the proposed 32% fee hike in committee yesterday and will in all likelihood pass it today in the general meeting.

A prominent question we need to ask is, where is the academic senate in all this? Have they taken a position, one way or the other, or do the senate leaders prefer to leave such matters up to UCOP and the Regents?

The sad truth is that, as it was already clear, the senate leadership is in bed with the President and the Regents. It's a big comfy bed, with a portrait of Governor Reagan Schwarzenegger hanging above it.