Changing Universities
Obama, Yudof, and the Future of Higher Ed
At the University of Michigan, President Obama made an important speech about his new push to control tuition increases and student debt at American universities. In Ann Arbor, he told college and university leaders that, “You can't assume that you'll just jack up tuition every single year. If you can't stop tuition from going up, then the funding you get from taxpayers each year will go down. We should push colleges to do better. We should hold them accountable if they don't.” The policy behind this statement can be found in his new Race to the Top initiative for higher education. Basically, the president wants to use federal grants and loans as a way of pressuring public universities and colleges to contain tuition increases, and while he does realize that state budge cuts have played a role in tuition increases, it is clear that he thinks that there are other reasons for the escalating costs. Moreover, the president wants to use a billion-dollar grant system to provide funding to states that help to control tuition increases.
In order to discuss this new initiative, PBS had President Yudof on the News Hour. The first question asked was the following: “At basic level, do you agree with the president's observation that the fast-rising cost of getting a college education is harming access?” Yudof’s response was, “You have to remember the president didn't mention that there's been systematic disinvestment in higher education. Our budget was cut $750 million in a year, about 25 percent . . . A third of our tuition goes back into financial aid and is distributed to low-income students -- 55 percent of our students pay no tuition -- 39 percent of the students are Pell-eligible, relatively low-income families. That's the reality.” In other words, Yudof blamed the move to a high fee, high aid model solely on state budget cuts.
While it is obvious that the state budge cuts have a direct effect on tuition increases, we have also seen tuition increases when the state contribution to the UC system has gone up. Furthermore, the other guest on the show, Richard Vedder, pointed out that there has been a massive increase in federal money going to universities and colleges, and that the increase in federally funded grants and loans has allowed universities to continue to spend more as they reduce their reliance on state support.
When President Yudof was asked about the rising costs of higher ed, he responded in the following manner, “Our costs are actually down 15 percent per credit hour over the last 10 years. That's the reality. The states don't want to pay. So it's like you go to your drugstore, the insurance company doesn't want to pay, your co-pay goes from $10 to $20. That doesn't mean the cost of the drug has doubled. It just means your costs have doubled.” This response is very revealing because Yudof is openly admitting that as tuition increases, the university is actually spending less money on educating students.
So not only are students paying more and getting less, but as Richard Vedder argued, universities are increasing their spending on non-educational expenses, like administration: “But it is also clear that universities in the United States over the last generation or so have enormously increased their staffs, for example, administrative personnel, student service personnel. There are climbing walls. They're not in and of themselves all that important, but the cumulative effects of a lot of spending on things outside of the core missions has contributed somewhat to the inflation in college costs.” In support of Vedder’s claims, my own research shows that universities now spend on average about 10% of their total budgets on undergraduate education, but undergraduates and states support 35% of the total university budgets. Meanwhile, the costs for professional education, administration, and research continues to increase, and so as undergraduates pay more, they end up subsidizing other parts of their universities to a greater extent.
When asked what would happen if the federal government decreased its support for the University of California, Yudof replied that, “classes will get bigger, class access may suffer, time to degree may grow. I agree with Professor Vedder. We have to do a better job of cutting our budgets. If we have too many administrators, let's reduce the number.” While we have seen some reduction of administrators at the Office of the President, we are still waiting to see what the campuses will do about administrative bloat. Furthermore, class sizes have already gotten bigger and the access to require classes has already decreased, so it is hard to see how the university is going to maintain educational quality as it increases tuition and aid.
What we should push for is clearer budget transparency so we can see how universities are actually spending the money they do have. We also have to insist on a renewed commitment to undergraduate education, and a major emphasis on making sure that federal research grants receive enough overhead funding (indirect costs) to make them at least break even. As a way of pushing this agenda, I have been invited to the White House to make a presentation to the administration.
In order to discuss this new initiative, PBS had President Yudof on the News Hour. The first question asked was the following: “At basic level, do you agree with the president's observation that the fast-rising cost of getting a college education is harming access?” Yudof’s response was, “You have to remember the president didn't mention that there's been systematic disinvestment in higher education. Our budget was cut $750 million in a year, about 25 percent . . . A third of our tuition goes back into financial aid and is distributed to low-income students -- 55 percent of our students pay no tuition -- 39 percent of the students are Pell-eligible, relatively low-income families. That's the reality.” In other words, Yudof blamed the move to a high fee, high aid model solely on state budget cuts.
While it is obvious that the state budge cuts have a direct effect on tuition increases, we have also seen tuition increases when the state contribution to the UC system has gone up. Furthermore, the other guest on the show, Richard Vedder, pointed out that there has been a massive increase in federal money going to universities and colleges, and that the increase in federally funded grants and loans has allowed universities to continue to spend more as they reduce their reliance on state support.
When President Yudof was asked about the rising costs of higher ed, he responded in the following manner, “Our costs are actually down 15 percent per credit hour over the last 10 years. That's the reality. The states don't want to pay. So it's like you go to your drugstore, the insurance company doesn't want to pay, your co-pay goes from $10 to $20. That doesn't mean the cost of the drug has doubled. It just means your costs have doubled.” This response is very revealing because Yudof is openly admitting that as tuition increases, the university is actually spending less money on educating students.
So not only are students paying more and getting less, but as Richard Vedder argued, universities are increasing their spending on non-educational expenses, like administration: “But it is also clear that universities in the United States over the last generation or so have enormously increased their staffs, for example, administrative personnel, student service personnel. There are climbing walls. They're not in and of themselves all that important, but the cumulative effects of a lot of spending on things outside of the core missions has contributed somewhat to the inflation in college costs.” In support of Vedder’s claims, my own research shows that universities now spend on average about 10% of their total budgets on undergraduate education, but undergraduates and states support 35% of the total university budgets. Meanwhile, the costs for professional education, administration, and research continues to increase, and so as undergraduates pay more, they end up subsidizing other parts of their universities to a greater extent.
When asked what would happen if the federal government decreased its support for the University of California, Yudof replied that, “classes will get bigger, class access may suffer, time to degree may grow. I agree with Professor Vedder. We have to do a better job of cutting our budgets. If we have too many administrators, let's reduce the number.” While we have seen some reduction of administrators at the Office of the President, we are still waiting to see what the campuses will do about administrative bloat. Furthermore, class sizes have already gotten bigger and the access to require classes has already decreased, so it is hard to see how the university is going to maintain educational quality as it increases tuition and aid.
What we should push for is clearer budget transparency so we can see how universities are actually spending the money they do have. We also have to insist on a renewed commitment to undergraduate education, and a major emphasis on making sure that federal research grants receive enough overhead funding (indirect costs) to make them at least break even. As a way of pushing this agenda, I have been invited to the White House to make a presentation to the administration.
UCR Students Promote a Bad Tuition Plan as Police Beat Protesters
The UC Regents meeting had a little of everything this week: UCR students came up with a new way to fund the university, a long list of new salary increases was released , UCSF asked to quit the system, a retired professor was fired, protesters disrupted the meeting, Regents met behind closed doors, and police attacked protesters who were using books as shields.
What does it all mean? Perhaps, it all adds up to the demise of the modern Western social contract. Without being too dramatic, we are seeing an attempt to resist the destruction of the central institutions of modernity: the university, the public commons, and the welfare state. Although it was once taken for granted that everyone should sacrifice for the common public good, this social contract has been broken, and now some are fighting to maintain it, while others are pushing us forward to a more premodern mode of social organization.
A case in point is the UCR “Student Investment Proposal,” which argues that students should pay no tuition while they are in school, but once they graduate, they should pay 5% of their income for 20 years. At first, this appears to be an elegant solution, but it really represents the final privatization of the public university. Instead of relying on state and federal funds and a common tax base, the new system would rely on private citizens to fund their own education through the use of a non-progressive flat tax. Just as UCSF wants to break its ties with the state and the rest of the UC system, this new funding model would allow students to “pay for their own education,” and would get rid of messy things like financial aid and family contributions.
Under this neoliberal payment program, the students working at Starbucks would be paying the same percent of their income to the UC as the students working for hedge funds. Of course, the university would have a strong incentive to only accept wealthy students, since these students have the highest chance of earning a big paycheck in the future. Likewise, there would be no reason to support programs in the humanities and social sciences if the big earners will all go to law school, medical school, and business school. In short, the student proposal is a private solution to a public problem, and yet we are told that the Office of the President will take it seriously.
It is indeed telling that a student group has come up with such a regressive funding model. We can read this as a sign of the way the backlash against the public good has been so successful that even good-intentioned people present anti-social ideas as if they were progressive. While the program does insist that the state should spend 2% of its budget on the UC each year, it does not say how the UC should use this money. Instead, we are told that students will pay for their own education out of their own future earnings. Of course, this model assumes that these students will have a future income in a world where we no longer have any sense of the common good.
What does it all mean? Perhaps, it all adds up to the demise of the modern Western social contract. Without being too dramatic, we are seeing an attempt to resist the destruction of the central institutions of modernity: the university, the public commons, and the welfare state. Although it was once taken for granted that everyone should sacrifice for the common public good, this social contract has been broken, and now some are fighting to maintain it, while others are pushing us forward to a more premodern mode of social organization.
A case in point is the UCR “Student Investment Proposal,” which argues that students should pay no tuition while they are in school, but once they graduate, they should pay 5% of their income for 20 years. At first, this appears to be an elegant solution, but it really represents the final privatization of the public university. Instead of relying on state and federal funds and a common tax base, the new system would rely on private citizens to fund their own education through the use of a non-progressive flat tax. Just as UCSF wants to break its ties with the state and the rest of the UC system, this new funding model would allow students to “pay for their own education,” and would get rid of messy things like financial aid and family contributions.
Under this neoliberal payment program, the students working at Starbucks would be paying the same percent of their income to the UC as the students working for hedge funds. Of course, the university would have a strong incentive to only accept wealthy students, since these students have the highest chance of earning a big paycheck in the future. Likewise, there would be no reason to support programs in the humanities and social sciences if the big earners will all go to law school, medical school, and business school. In short, the student proposal is a private solution to a public problem, and yet we are told that the Office of the President will take it seriously.
It is indeed telling that a student group has come up with such a regressive funding model. We can read this as a sign of the way the backlash against the public good has been so successful that even good-intentioned people present anti-social ideas as if they were progressive. While the program does insist that the state should spend 2% of its budget on the UC each year, it does not say how the UC should use this money. Instead, we are told that students will pay for their own education out of their own future earnings. Of course, this model assumes that these students will have a future income in a world where we no longer have any sense of the common good.
Biden and Romney Talk Higher Ed
National politicians continue to speak about higher education from a perspective of almost total ignorance. In fact, Mitt Romney has actually argued that for-profit colleges are the solution for making higher education more affordable and accessible. Of course, Romney does not say that these schools have some of the highest tuitions and lowest graduate rates. As the New York Times points out, Romney may be influenced by the fact that he is receiving large campaign contributions from for-profit institutions. His position also connects with his belief that these schools represent the free market at its purest. Of course, what he ignores or does not know is that most of the funding for these schools comes from federal Pell Grants.
Even more scary is VP Joe Biden’s recent presentation on higher education. Based on his own experience as an adjunct law professor, he argues that the salaries of adjuncts are driving up the costs of higher education. This is wrong on so many levels that one wonders if there is any hope of having our political officials understand anything about the economics of higher ed.
As the President pushes his goal to have the United States regain its position as the country with the highest number of college graduates, all of our state and national policies are moving in the opposite direction. As I have discussed in regard to the reversal of the California Master Plan, what is happening is that as more students are being crowded out of community college and state universities, they are turning to high-cost, low-performing for-profit schools. The end result is that students are paying more and going into greater debt, but we are producing fewer degrees.
One possible solution is to have the federal government to take all of the money it is spending on for-profit schools and spend it on public universities. Another solution is to have the Fed bail out student debt and to move to a system where higher education is made free and universal. For a discussion of these issues, you can listen to a radio show in which I participated.
Even more scary is VP Joe Biden’s recent presentation on higher education. Based on his own experience as an adjunct law professor, he argues that the salaries of adjuncts are driving up the costs of higher education. This is wrong on so many levels that one wonders if there is any hope of having our political officials understand anything about the economics of higher ed.
As the President pushes his goal to have the United States regain its position as the country with the highest number of college graduates, all of our state and national policies are moving in the opposite direction. As I have discussed in regard to the reversal of the California Master Plan, what is happening is that as more students are being crowded out of community college and state universities, they are turning to high-cost, low-performing for-profit schools. The end result is that students are paying more and going into greater debt, but we are producing fewer degrees.
One possible solution is to have the federal government to take all of the money it is spending on for-profit schools and spend it on public universities. Another solution is to have the Fed bail out student debt and to move to a system where higher education is made free and universal. For a discussion of these issues, you can listen to a radio show in which I participated.
The University as Investment Bank and Questions about State Funding
In response to my last blog entry on President Yudof and the current financing of the UC system, and anonymous commenter wrote the following: “This post is highly misleading. You are implying that UC takes contracts and grants, puts the money in STIP, then spends it elsewhere. This is simply not accurate. STIP interest, not the original funds, can be spent elsewhere. What would you have them do with a year of funding---keep it under the mattress until it is spent?” In response to this response, I would like to show how the UC and other universities have become investment banks.
I myself did not understand this system until I met with a high-ranking UC official to try to figure out how the UC was able to transfer $1 billion from the Short-Term Investment Pool (STIP) to the retirement system (UCRS). When I asked if the administration had borrowed the money from the different accounts that hold grant funds, operating cash, state funds, and tuition dollars, I was informed that I am looking at it in the wrong way. I was told that I should think of the university as a bank, and just like once you deposit money in a savings account, it does not just sit there, but it is invested in different things. This explanation reminded me of the famous scene from It’s a Wonderful Life, where Jimmy Stewart’s character tells the people trying to withdraw their money that their funds are not there because they have been lent out to help build their neighbor’s homes and businesses.
I am not implying here that the UC is doing something illegal; rather, my point is that the university has much more flexibility with its funds than it likes to admit. For example, last summer, the university suggested to the Regents the following financial strategies:
“• Transfer an additional $1 billion from the systemwide Short Term Investment Pool (STIP) into the Total Return Investment Pool (TRIP) to increase investment earnings;
• Distribute a two percent extraordinary payout on eligible year-end 2010-11 balances of funds functioning as endowments (FFEs);
• Distribute a two percent extraordinary payout on eligible year-end 2010-11 balances of true endowments; and
• Draw down as needed from the University’s employee/retiree healthcare reserve.”
The first strategy is to move $1 billion of funds from low-risk securities to higher risk investments. Once again, individual accounts are not reached into and taxed; instead, a portion of the pooled assets are transferred. The second two strategies do the same thing with the pooled endowments and other funds that function as endowments. Finally, the fourth strategy is to take money that is being held for retiree healthcare and use it for other purposes. (This final move should raise some concerns since retiree healthcare is not a vested right, and the UC plans to reduce the amount of healthcare it covers for retirees by making former employees pay more for their healthcare.)
What is so interesting about these financial transactions is that they do support my contention that the university could use grant money or medical revenue to support things like instruction if it saw this as a priority. However, from the university’s perspective, spending money on instruction means that the funds just disappear, but if money is used for other purposes, they could bring in more money in the future.
This financialized model has been hastened by the recent state reductions of UC funding. In fact, I believe that the governor’s latest budget plan is the worst one ever for the UC because not only does it lock in a long-term reduction of state funding, but it also gives the UC administration more leeway to use state funds in any way that they want. While some at UCOP have actually applauded this new budget as a positive gesture, the possible $300 million increase, which would be reduced by $200 million if the governor’s tax initiative does not pass, does nothing to return funding to the 2007-8 level of $3.2 billion. Instead, the UC would get $2.5 billion, in the best-case scenario, but would have to take on millions of dollars of debt financing.
While the UC claims that the new budget increases state funding by 4%, it really should be considered to be a 20% reduction from the past high. So why has UCOP reversed course and applauded something that they always in the past have attacked? Moreover, if the state increase is considered to be 4%, does that mean that tuition will have to go up 12% under the plan discussed last September? Also, since the state does suggest using $90 million to fund the retirement of state-supported employees, does this mean that the UC will have to follow any new state pension restrictions? Stay tuned.
I myself did not understand this system until I met with a high-ranking UC official to try to figure out how the UC was able to transfer $1 billion from the Short-Term Investment Pool (STIP) to the retirement system (UCRS). When I asked if the administration had borrowed the money from the different accounts that hold grant funds, operating cash, state funds, and tuition dollars, I was informed that I am looking at it in the wrong way. I was told that I should think of the university as a bank, and just like once you deposit money in a savings account, it does not just sit there, but it is invested in different things. This explanation reminded me of the famous scene from It’s a Wonderful Life, where Jimmy Stewart’s character tells the people trying to withdraw their money that their funds are not there because they have been lent out to help build their neighbor’s homes and businesses.
I am not implying here that the UC is doing something illegal; rather, my point is that the university has much more flexibility with its funds than it likes to admit. For example, last summer, the university suggested to the Regents the following financial strategies:
“• Transfer an additional $1 billion from the systemwide Short Term Investment Pool (STIP) into the Total Return Investment Pool (TRIP) to increase investment earnings;
• Distribute a two percent extraordinary payout on eligible year-end 2010-11 balances of funds functioning as endowments (FFEs);
• Distribute a two percent extraordinary payout on eligible year-end 2010-11 balances of true endowments; and
• Draw down as needed from the University’s employee/retiree healthcare reserve.”
The first strategy is to move $1 billion of funds from low-risk securities to higher risk investments. Once again, individual accounts are not reached into and taxed; instead, a portion of the pooled assets are transferred. The second two strategies do the same thing with the pooled endowments and other funds that function as endowments. Finally, the fourth strategy is to take money that is being held for retiree healthcare and use it for other purposes. (This final move should raise some concerns since retiree healthcare is not a vested right, and the UC plans to reduce the amount of healthcare it covers for retirees by making former employees pay more for their healthcare.)
What is so interesting about these financial transactions is that they do support my contention that the university could use grant money or medical revenue to support things like instruction if it saw this as a priority. However, from the university’s perspective, spending money on instruction means that the funds just disappear, but if money is used for other purposes, they could bring in more money in the future.
This financialized model has been hastened by the recent state reductions of UC funding. In fact, I believe that the governor’s latest budget plan is the worst one ever for the UC because not only does it lock in a long-term reduction of state funding, but it also gives the UC administration more leeway to use state funds in any way that they want. While some at UCOP have actually applauded this new budget as a positive gesture, the possible $300 million increase, which would be reduced by $200 million if the governor’s tax initiative does not pass, does nothing to return funding to the 2007-8 level of $3.2 billion. Instead, the UC would get $2.5 billion, in the best-case scenario, but would have to take on millions of dollars of debt financing.
While the UC claims that the new budget increases state funding by 4%, it really should be considered to be a 20% reduction from the past high. So why has UCOP reversed course and applauded something that they always in the past have attacked? Moreover, if the state increase is considered to be 4%, does that mean that tuition will have to go up 12% under the plan discussed last September? Also, since the state does suggest using $90 million to fund the retirement of state-supported employees, does this mean that the UC will have to follow any new state pension restrictions? Stay tuned.
My Dialogue with President Yudof
On Dec. 2, 2011, UC President Mark Yudof gave a speech to the California Chamber of Commerce entitled, “A Baker’s Dozen Myths about Higher Education.” This presentation is classic Yudof, and it reveals the great disconnect between the UC administration and the facts on the ground. To analyze several of Yudof’s claims, I will quote his myths and explanations, and then respond to him in the form of a dialogue.
Yudof: The cost of producing UC degrees and credit hours has gone up over the last decade. I hear this myth all the time. And it’s frustrating, because this cost has actually dropped by more than 15%, in constant dollars, since the 1990s. This cost has dropped in part due to a broad range of system-wide efficiencies: common IT systems; reduced employee travel; thousands of unfilled faculty and staff positions; 1/3 fewer employees at the UC Office of the President; a higher student-faculty ratio, and so on.
Samuels: This claim is actually partially true: the money UC spends on undergraduate students has gone down, but that is mostly due to expanding class size, the use of inexpensive lecturers and graduate student instructors, and the elimination of many courses and class sections. What you do not say is that at the same time, the cost for graduate and professional education has gone up, and while there are fewer administrators at the Office of the President, there are more on the campuses. In fact, there are now more administrators than faculty members.
Yudof: Tuition goes up because the university is providing resort amenities to students. Perpetuators of this conspiracy theory are fiercely devoted to it. Rock climbing walls, manicured landscaping, gourmet dining halls—these and other examples are constantly cited as the real cause of higher tuition bills.
Samuels: This claim is also partially true, but it neglects to add that the cost of room, board, and other essentials, like books and computer use have also gone up. Moreover, UC can only construct its new buildings and amenities by promising to raise tuition on its bond submissions.
Yudof: Tuition goes up because state funding goes down. Plain and simple.
Samuels: However, if you look here at the history of UC tuition increases, you see that in the last twenty years, UC has increased tuition every year except twice. This means that tuition has gone up even when state funding has gone up.
Yudof: UC raises tuition as federal student loan caps are lifted. This purported practice isn’t just false. It’s flat-out illegal for UC and other non-profit universities.
Samuels: UC may not be simply raising tuition because the caps on federal loans are going up, but the system is able to increase tuition because students are willing to go into debt to pay for the increases.
Yudof: Tenure track faculty at UC do not teach undergraduates. Tenure track faculty members teach about 61% of all student credit hours at UC. And in fact, this percentage is up slightly in recent years as budget cuts forced campuses to reduce the ranks of lecturers, visitors, and other non-tenure track faculty.
Samuels: First of all the number of lecturers has gone up recently, and the UC is planning to increase its reliance on non-tenured faculty to reduce costs. Second, if tenured faculty teach 61%, then 39% of the courses are being taught by faculty who are not eligible for tenure. Third, UC refuses to track the number of courses and sections taught by graduate students, so they are not included in these statistics.
Yudof: The number of high-level administrators at UC is expanding. UC, we call our high-level administrators “senior management group” members, or SMGs. Rather than expand or remain constant, the number of SMGs has actually declined slightly. Last year, the number dropped from 315 to 293—which means they account for less than 1% of all full-time-equivalent personnel across the entire UC system.
Samuels: “The Senior Management Group (SMG) is only a small sector of the administration that now outnumbers the faculty. While you always concentrate on the senior managers, you ignore the cost of non-senior administrators on the campuses.
Yudof: Non-residents only make up 6.6% of UC undergraduate students system-wide. This is well below the percentage at most of the university’s public comparator campuses. At the University of Michigan, for example, non-residents comprise 35% of undergraduate students. At the University of Virginia, it’s about 30%.
Samuels: You are bending the truth to prove your argument. At all of the elite campuses, non-resident students have replaced students from California, and this trend is only growing. Currently, Berkeley has a target of 30% nonresident students and UCLA is shooting for 25%. UCSD and Davis also have ambitious plans to increase nonresident enrollments.
Yudof: Only the wealthy can afford to attend UC. Nothing belies this myth more than the incredible socioeconomic diversity of UC students. About 40% of all UC undergraduates receive Pell grants. Pell grant recipients come from families with an annual household income of $50,000 or less.
Samuels: The UC system does deserve high marks for making the university affordable to low-income students, but this has resulted in increased costs and decreased enrollments for middle-class students. As you yourself admit, “High tuition actually hurts the middle class much more than it does the poor. This is because high tuition enables institutions to employ a high fee/high financial aid model.” This just proves my previous point.
Yudof: myth #10: UC student debt is skyrocketing. At graduation, the average student loan debt of UC students is $16,795. This figure is almost $10,000 lower than the national average, which currently stands at $25,250. In fact, when adjusted for inflation, UC students’ debt load has remained virtually flat since 2006.
Samuels: Once again, the average debt is remaining flat, but the debt for middle-class students is going up.
Yudof: Corporate and alumni giving can replace all the core funding the legislature cuts from UC’s budget. Corporate and alumni giving is phenomenally important to UC. It played a critical role in the foundation, and the development, of this university. And throughout UC’s history, it has helped sustain the university during times of fiscal crisis—like the crisis we’re experiencing today. At the same time, most corporate and alumni giving is restricted—which means that if the state cuts our core funding, private giving can’t necessarily cover the gap.
Samuels: If the UC cannot use its donations to fund instructional programs, why is it spending so much money trying to raise these funds, and why in the past didn’t the university go on a campaign to raise money for educational purposes?
Yudof: $1 billion can be cut from UC’s budget with zero effect. This isn’t a myth. It’s a canard. I hear this fiction all the time. And I find it very troubling—extremely troubling. UC’s annual budget is roughly $20 billion. A $1 billion hole is hard to ignore on its own. But it’s more complicated than that. Much of our funding is restricted. Hospital revenue is restricted. Government grants and contracts are restricted. You can’t just take money from laser research and give it to a professor of Portuguese. So when that $1 billion is cut from our core funds, it can’t necessarily be covered by our other sources.
Samuels: This is one of your favorite arguments, which I have refuted on many occasions. In fact, the recent state audit found that most of UCs restricted funds are only restricted by the administration. Currently, UC places all types of funds, including federal grants, in its short-term investment pool. It then uses this pool as a central bank and takes out money to support any purpose it chooses. For instance, the UC recently transferred $1 billion into the retirement system and lent the state $1.7 billion.
Yudof: The University of California only serves its students. This is California’s university. It is defined by its public service mission. And it serves all the people of this state. So when UC’s core funding is cut, it ends up affecting all of us, too.
Samuels: Finally, we agree!
Yudof: The cost of producing UC degrees and credit hours has gone up over the last decade. I hear this myth all the time. And it’s frustrating, because this cost has actually dropped by more than 15%, in constant dollars, since the 1990s. This cost has dropped in part due to a broad range of system-wide efficiencies: common IT systems; reduced employee travel; thousands of unfilled faculty and staff positions; 1/3 fewer employees at the UC Office of the President; a higher student-faculty ratio, and so on.
Samuels: This claim is actually partially true: the money UC spends on undergraduate students has gone down, but that is mostly due to expanding class size, the use of inexpensive lecturers and graduate student instructors, and the elimination of many courses and class sections. What you do not say is that at the same time, the cost for graduate and professional education has gone up, and while there are fewer administrators at the Office of the President, there are more on the campuses. In fact, there are now more administrators than faculty members.
Yudof: Tuition goes up because the university is providing resort amenities to students. Perpetuators of this conspiracy theory are fiercely devoted to it. Rock climbing walls, manicured landscaping, gourmet dining halls—these and other examples are constantly cited as the real cause of higher tuition bills.
Samuels: This claim is also partially true, but it neglects to add that the cost of room, board, and other essentials, like books and computer use have also gone up. Moreover, UC can only construct its new buildings and amenities by promising to raise tuition on its bond submissions.
Yudof: Tuition goes up because state funding goes down. Plain and simple.
Samuels: However, if you look here at the history of UC tuition increases, you see that in the last twenty years, UC has increased tuition every year except twice. This means that tuition has gone up even when state funding has gone up.
Yudof: UC raises tuition as federal student loan caps are lifted. This purported practice isn’t just false. It’s flat-out illegal for UC and other non-profit universities.
Samuels: UC may not be simply raising tuition because the caps on federal loans are going up, but the system is able to increase tuition because students are willing to go into debt to pay for the increases.
Yudof: Tenure track faculty at UC do not teach undergraduates. Tenure track faculty members teach about 61% of all student credit hours at UC. And in fact, this percentage is up slightly in recent years as budget cuts forced campuses to reduce the ranks of lecturers, visitors, and other non-tenure track faculty.
Samuels: First of all the number of lecturers has gone up recently, and the UC is planning to increase its reliance on non-tenured faculty to reduce costs. Second, if tenured faculty teach 61%, then 39% of the courses are being taught by faculty who are not eligible for tenure. Third, UC refuses to track the number of courses and sections taught by graduate students, so they are not included in these statistics.
Yudof: The number of high-level administrators at UC is expanding. UC, we call our high-level administrators “senior management group” members, or SMGs. Rather than expand or remain constant, the number of SMGs has actually declined slightly. Last year, the number dropped from 315 to 293—which means they account for less than 1% of all full-time-equivalent personnel across the entire UC system.
Samuels: “The Senior Management Group (SMG) is only a small sector of the administration that now outnumbers the faculty. While you always concentrate on the senior managers, you ignore the cost of non-senior administrators on the campuses.
Yudof: Non-residents only make up 6.6% of UC undergraduate students system-wide. This is well below the percentage at most of the university’s public comparator campuses. At the University of Michigan, for example, non-residents comprise 35% of undergraduate students. At the University of Virginia, it’s about 30%.
Samuels: You are bending the truth to prove your argument. At all of the elite campuses, non-resident students have replaced students from California, and this trend is only growing. Currently, Berkeley has a target of 30% nonresident students and UCLA is shooting for 25%. UCSD and Davis also have ambitious plans to increase nonresident enrollments.
Yudof: Only the wealthy can afford to attend UC. Nothing belies this myth more than the incredible socioeconomic diversity of UC students. About 40% of all UC undergraduates receive Pell grants. Pell grant recipients come from families with an annual household income of $50,000 or less.
Samuels: The UC system does deserve high marks for making the university affordable to low-income students, but this has resulted in increased costs and decreased enrollments for middle-class students. As you yourself admit, “High tuition actually hurts the middle class much more than it does the poor. This is because high tuition enables institutions to employ a high fee/high financial aid model.” This just proves my previous point.
Yudof: myth #10: UC student debt is skyrocketing. At graduation, the average student loan debt of UC students is $16,795. This figure is almost $10,000 lower than the national average, which currently stands at $25,250. In fact, when adjusted for inflation, UC students’ debt load has remained virtually flat since 2006.
Samuels: Once again, the average debt is remaining flat, but the debt for middle-class students is going up.
Yudof: Corporate and alumni giving can replace all the core funding the legislature cuts from UC’s budget. Corporate and alumni giving is phenomenally important to UC. It played a critical role in the foundation, and the development, of this university. And throughout UC’s history, it has helped sustain the university during times of fiscal crisis—like the crisis we’re experiencing today. At the same time, most corporate and alumni giving is restricted—which means that if the state cuts our core funding, private giving can’t necessarily cover the gap.
Samuels: If the UC cannot use its donations to fund instructional programs, why is it spending so much money trying to raise these funds, and why in the past didn’t the university go on a campaign to raise money for educational purposes?
Yudof: $1 billion can be cut from UC’s budget with zero effect. This isn’t a myth. It’s a canard. I hear this fiction all the time. And I find it very troubling—extremely troubling. UC’s annual budget is roughly $20 billion. A $1 billion hole is hard to ignore on its own. But it’s more complicated than that. Much of our funding is restricted. Hospital revenue is restricted. Government grants and contracts are restricted. You can’t just take money from laser research and give it to a professor of Portuguese. So when that $1 billion is cut from our core funds, it can’t necessarily be covered by our other sources.
Samuels: This is one of your favorite arguments, which I have refuted on many occasions. In fact, the recent state audit found that most of UCs restricted funds are only restricted by the administration. Currently, UC places all types of funds, including federal grants, in its short-term investment pool. It then uses this pool as a central bank and takes out money to support any purpose it chooses. For instance, the UC recently transferred $1 billion into the retirement system and lent the state $1.7 billion.
Yudof: The University of California only serves its students. This is California’s university. It is defined by its public service mission. And it serves all the people of this state. So when UC’s core funding is cut, it ends up affecting all of us, too.
Samuels: Finally, we agree!
Report from Sacramento: Refund California and Support Peaceful Protests
The state hearing on student protests in the UC and UCSC system produced one tangible result: the promise of a follow-up hearing. Legislators were also given an earful from students who very effectively tied the question of police violence to the state’s failure to fund higher ed. Moreover, the state heard loud and clear that the governor’s tax initiative fails to support higher education and makes workers and middle-class families pay more during a time when they are making less.
One of the most interesting moments occurred after a CSU representative blamed outside agitators for the “mob” violence at the most recent CSU trustees meeting. Charlie Eaton from the UAW set the record straight and told the legislators that the CSU has just lied. Eaton stressed that three of the arrested students were from the CSUs and the other student was a UC student, and all charges were dropped after news video clearly showed a police broke the door window with his own baton.
Eaton also stated that the students are part of the Refund California movement, which is trying to make bankers and millionaires pay to restore funding for higher education. Furthermore, he stressed that the UC regents and CSU trustees are almost all members of the 1% who are failing to protect California’s master plan. The legislators then asked the student panel what should be done about the regents.
Several of us pointed out that there will only be more protests, and the recent protest rules handed down from UCR will only make things worse. We later leaned that the UCR Chancellor reversed course, and he decided to take back the new restrictions on demonstrations. This reversal is another sign that the UC and CSU administrations are now playing defense, and they are feeling quite vulnerable.
While the members of the Refund California are pushing for the CFT Millionaire’s tax, we may also want to consider the new initiative to tax oil extraction to fund higher education. It is clear that now is the time to push for a progressive agenda for California.
One of the most interesting moments occurred after a CSU representative blamed outside agitators for the “mob” violence at the most recent CSU trustees meeting. Charlie Eaton from the UAW set the record straight and told the legislators that the CSU has just lied. Eaton stressed that three of the arrested students were from the CSUs and the other student was a UC student, and all charges were dropped after news video clearly showed a police broke the door window with his own baton.
Eaton also stated that the students are part of the Refund California movement, which is trying to make bankers and millionaires pay to restore funding for higher education. Furthermore, he stressed that the UC regents and CSU trustees are almost all members of the 1% who are failing to protect California’s master plan. The legislators then asked the student panel what should be done about the regents.
Several of us pointed out that there will only be more protests, and the recent protest rules handed down from UCR will only make things worse. We later leaned that the UCR Chancellor reversed course, and he decided to take back the new restrictions on demonstrations. This reversal is another sign that the UC and CSU administrations are now playing defense, and they are feeling quite vulnerable.
While the members of the Refund California are pushing for the CFT Millionaire’s tax, we may also want to consider the new initiative to tax oil extraction to fund higher education. It is clear that now is the time to push for a progressive agenda for California.
Progressives Take on The Governor over Taxes
While Governor Jerry Brown’s recently proposed tax initiative does seek to provide $6 billion in new revenue for the state, it is being challenged by three other initiatives, but only one is truly progressive. The California Federation of Teachers has formed a coalition with several other groups, including the Courage Campaign, to push for a tax on millionaires to fund K-higher education. Although some fear that competing initiatives may result in all of them losing at the ballot, we are hoping that everyone will eventually rally behind the CFT proposal, which is the only one that has a good chance at passing.
One of the problems with Brown’s initiative is that it combines a tax on people earning more than $250,000 with a sales tax increase of .5%. This combination means that struggling lower- and middle-class workers will end up paying more for a tax that might not help fund higher education. Moreover, the Governor’s initiative may not be approved by the Attorney General because it fails to pass the test of being a “single purpose” initiative. In fact, one of the hidden aspects of Brown’s proposal is that it moves the responsibility to house certain prisoners from the state to local governments.
The other main tax initiatives are also not progressive, and they have a lower chance of passing. To work through this problem of competing tax proposals, the CFT is pushing for a shared poll that would see what Californian voters would actually support. So far, a coalition of UC unions and students groups is supporting the CFT proposal, but the governor and Democratic members in the legislature are still pushing for a non-progressive solution. The next few months thus will be crucial for all of us to rally around the CFT proposal to make sure that higher education gets funded in a fair and equitable manner.
One of the problems with Brown’s initiative is that it combines a tax on people earning more than $250,000 with a sales tax increase of .5%. This combination means that struggling lower- and middle-class workers will end up paying more for a tax that might not help fund higher education. Moreover, the Governor’s initiative may not be approved by the Attorney General because it fails to pass the test of being a “single purpose” initiative. In fact, one of the hidden aspects of Brown’s proposal is that it moves the responsibility to house certain prisoners from the state to local governments.
The other main tax initiatives are also not progressive, and they have a lower chance of passing. To work through this problem of competing tax proposals, the CFT is pushing for a shared poll that would see what Californian voters would actually support. So far, a coalition of UC unions and students groups is supporting the CFT proposal, but the governor and Democratic members in the legislature are still pushing for a non-progressive solution. The next few months thus will be crucial for all of us to rally around the CFT proposal to make sure that higher education gets funded in a fair and equitable manner.
Open Letter to President Yudof
Dear President Yudof,
A year ago, I told the regents that they needed to investigate recent incidents of police pepper spraying, tasering, and beating students. I said that we cannot have a real dialogue if students, faculty and workers are afraid that their actions will result in bodily harm. However, President Yudof, you and the Regents stood by the police and did nothing.
The same day I addressed the Regents, a police officer pulled a gun on several students. Once again, I urged the university to investigate and punish dangerous police actions, and still nothing was done. It has taken a viral video of police violence at UC Davis for the university to take this issue seriously.
While all of the attention is now on UC Davis, there needs to be an investigation of the broader culture of police hostility towards students, workers, and faculty. I believe this culture of violence starts at the top, and it is the Regents and the President who must be responsible for the safety on all of our campuses. When violent actions by the police continue to go unpunished, the administration sends the message that these acts are tolerated. What we need to do is to simply disarm the police on our campuses, which would follow the model of most private universities in America and most public universities around the world.
Bob Samuels, President, UC-AFT
A year ago, I told the regents that they needed to investigate recent incidents of police pepper spraying, tasering, and beating students. I said that we cannot have a real dialogue if students, faculty and workers are afraid that their actions will result in bodily harm. However, President Yudof, you and the Regents stood by the police and did nothing.
The same day I addressed the Regents, a police officer pulled a gun on several students. Once again, I urged the university to investigate and punish dangerous police actions, and still nothing was done. It has taken a viral video of police violence at UC Davis for the university to take this issue seriously.
While all of the attention is now on UC Davis, there needs to be an investigation of the broader culture of police hostility towards students, workers, and faculty. I believe this culture of violence starts at the top, and it is the Regents and the President who must be responsible for the safety on all of our campuses. When violent actions by the police continue to go unpunished, the administration sends the message that these acts are tolerated. What we need to do is to simply disarm the police on our campuses, which would follow the model of most private universities in America and most public universities around the world.
Bob Samuels, President, UC-AFT
Police Violence: The New Normal in America
Recent actions by police at Occupy encampments and student protests shows what happens when state violence goes unpunished. The new normal in America is that the police feel justified to inflict pain on nonviolent protesters, and the roots of this change have to be connected to the redefinition of torture as enhanced interrogation. Moreover, the Obama administration's decision not to hold any members of the Bush's torture regime responsible has set the stage for the use of police violence without fear of retaliation.
While we are not used to thinking of the U.S. as a police state, every day sees a new move in that direction. It is now commonplace for police to show up at peaceful protests dressed in full riot gear ready to baton, pepper spray, and intimidate citizens employing their constitutional rights of free speech and free assembly. Of course, the ruling class, including President Obama, has been silent on this issue.
Just as torture has been renamed enhanced interrogation, so has nonviolent resistance been redefined as violence. These actions can only result in a de-legitimization of politics as we descend into a police state. However, the protesters know that the only way to get their message to the masses is to allow for the police to inflict pain because in our media, if it bleeds, it leads. The end result is, as Chris Hedges has argued, all of our "liberal" institutions (the media, the Democratic party, the universities) lose their legitimacy.
A new generation of Americans has now grown up in this police-media-political context, and even though young people are used to communicating on the disembodied Web, they are putting their bodies on the line to make our country wake up. The failure of the political class to respond in any rational way only pours fuel on the fire, and while it may be too soon to talk about a second American revolution, the current dynamic is generating major social unrest. We camp, they beat us, and we return.
All out to Davis!
While we are not used to thinking of the U.S. as a police state, every day sees a new move in that direction. It is now commonplace for police to show up at peaceful protests dressed in full riot gear ready to baton, pepper spray, and intimidate citizens employing their constitutional rights of free speech and free assembly. Of course, the ruling class, including President Obama, has been silent on this issue.
Just as torture has been renamed enhanced interrogation, so has nonviolent resistance been redefined as violence. These actions can only result in a de-legitimization of politics as we descend into a police state. However, the protesters know that the only way to get their message to the masses is to allow for the police to inflict pain because in our media, if it bleeds, it leads. The end result is, as Chris Hedges has argued, all of our "liberal" institutions (the media, the Democratic party, the universities) lose their legitimacy.
A new generation of Americans has now grown up in this police-media-political context, and even though young people are used to communicating on the disembodied Web, they are putting their bodies on the line to make our country wake up. The failure of the political class to respond in any rational way only pours fuel on the fire, and while it may be too soon to talk about a second American revolution, the current dynamic is generating major social unrest. We camp, they beat us, and we return.
All out to Davis!
Occupy California, Refund Higher Education, and the Question of Violence (Plus Schedule of Events)
On November 15th, faculty and students at UC Berkeley will hold a one-day strike and will attempt to re-establish an Occupy Cal encampment. This action is supported by thousands of students and faculty members throughout the UC system and around the world. One of the reasons for this demonstration is to protest the excessive use of police force that has been used against students and faculty members. People will also be protesting the last-minute cancellation of the UC Regents meeting.
While students, employees, and faculty members have asked educational leaders to sign a pledge to join us in our call to re-fund higher education in California by making the banks and wealthiest 1% pay, the regents have responded by hiding from the public. So the new plan is to track down the higher ed leaders on November 16th when Southern California protesters will converge at the CSU trustees meeting in Long Beach, and Northern California protesters will rally and march in the San Francisco financial district, starting at noon at Justin Herman Plaza. We will once again demand that the UC Regents and CSU trustees sign our pledge, and we will invite them to then join us as we continue the march to the state building in San Francisco. Once there, we will demand that government officials also support our pledge, and we will have a people’s regents meeting.
Setting the Stage
When the UC announced that it had canceled the Regents meeting, it stated that, “they had received information indicating that rogue elements intent on violence and confrontation with UC public safety officers were planning to attach themselves to peaceful demonstrations expected to occur at the meeting.” While the UC did not reveal the sources for these threats, it is important to ask, how does the university define violence?
According to a UC police officer, the university is using the following definition of violence, “"the individuals who linked arms and actively resisted, that in itself is an act of violence...I understand that many students may not think that, but linking arms in a human chain when ordered to step aside is not a nonviolent protest." Someone needs to call Gandhi and Martin Luther King to tell them that the whole history of non-violent resistance has been rewritten.
It is of course outrageous for any public university to declare that students and workers can be beaten with batons if they engage in the dangerous act of linking arms, and it is especially absurd for this claim to be made at UC Berkeley, which stands for the birth of the Free Speech movement. If people are no longer able to protest nonviolently, then they may be forced to use other means. (I am not endorsing here the use of violence; rather, I am arguing that the police have to allow for nonviolent resistance)
By shutting down the Regents meeting, the university has also sent the message that the university is not only being privatized on a financial basis, but it is also being privatized on a bureaucratic basis. The regents are now telling the people of California that public matters have to be discussed in private, and the public is no longer invited to witness the dismantling of the “world’s greatest public university.”
Following the day of activities on the 16th, attention will turn to the one-day strikes at CSU East Bay and CSU Dominguez Hills. Ultimately, what is at stake is the future of public higher education in California and around the world. As the refund higher education movement couples with the Occupy Wall Street movement, a new level of organization and energy will emerge.
SCHEDULE FOR NOV 16 STATE-WIDE DAY OF ACTION TO REFUND PUBLIC EDUCTION
10 – 10:30am: free busses leave from Telegraph and Bancroft on Berkeley
11:30am – Noon: gather for a free lunch.
Noon rally at Justin Herman Plaza in collaboration with Occupy SF, 3
blocks from the Embarcadero BART station
1:00pm: March through the Financial District to make the banks pay for
the financial crisis they created
4:00pm: People's Assembly for Public Education at the State Building
to call on Gov Brown to make the banks pay public education, 455
Golden Gate Ave San Fransisco
3:00pm early bus returns to UC Berkeley
6:00pm remaining buses return to UC Berkeley
SCHEDULE FOR NOV15 OPEN UNIVERSITY & STRIKE AT UC BERKELEY
8am-5pm: All day Open University activities (teach-outs, workshops,
public readings, installations, etc.) at Sproul Plaza and surrounding
areas.
Noon: Mass convergence at Sproul Hall and formal inauguration of
day-long Open University.
Noon – 2pm: Teach-outs in Sproul Plaza.
2pm: Rally against police violence and other, related forms of
violence, including dispossession, privatization, and debt.
2:30pm: March to Berkeley High and Berkeley City College.
5pm: General Assembly at Sproul Plaza.
While students, employees, and faculty members have asked educational leaders to sign a pledge to join us in our call to re-fund higher education in California by making the banks and wealthiest 1% pay, the regents have responded by hiding from the public. So the new plan is to track down the higher ed leaders on November 16th when Southern California protesters will converge at the CSU trustees meeting in Long Beach, and Northern California protesters will rally and march in the San Francisco financial district, starting at noon at Justin Herman Plaza. We will once again demand that the UC Regents and CSU trustees sign our pledge, and we will invite them to then join us as we continue the march to the state building in San Francisco. Once there, we will demand that government officials also support our pledge, and we will have a people’s regents meeting.
Setting the Stage
When the UC announced that it had canceled the Regents meeting, it stated that, “they had received information indicating that rogue elements intent on violence and confrontation with UC public safety officers were planning to attach themselves to peaceful demonstrations expected to occur at the meeting.” While the UC did not reveal the sources for these threats, it is important to ask, how does the university define violence?
According to a UC police officer, the university is using the following definition of violence, “"the individuals who linked arms and actively resisted, that in itself is an act of violence...I understand that many students may not think that, but linking arms in a human chain when ordered to step aside is not a nonviolent protest." Someone needs to call Gandhi and Martin Luther King to tell them that the whole history of non-violent resistance has been rewritten.
It is of course outrageous for any public university to declare that students and workers can be beaten with batons if they engage in the dangerous act of linking arms, and it is especially absurd for this claim to be made at UC Berkeley, which stands for the birth of the Free Speech movement. If people are no longer able to protest nonviolently, then they may be forced to use other means. (I am not endorsing here the use of violence; rather, I am arguing that the police have to allow for nonviolent resistance)
By shutting down the Regents meeting, the university has also sent the message that the university is not only being privatized on a financial basis, but it is also being privatized on a bureaucratic basis. The regents are now telling the people of California that public matters have to be discussed in private, and the public is no longer invited to witness the dismantling of the “world’s greatest public university.”
Following the day of activities on the 16th, attention will turn to the one-day strikes at CSU East Bay and CSU Dominguez Hills. Ultimately, what is at stake is the future of public higher education in California and around the world. As the refund higher education movement couples with the Occupy Wall Street movement, a new level of organization and energy will emerge.
SCHEDULE FOR NOV 16 STATE-WIDE DAY OF ACTION TO REFUND PUBLIC EDUCTION
10 – 10:30am: free busses leave from Telegraph and Bancroft on Berkeley
11:30am – Noon: gather for a free lunch.
Noon rally at Justin Herman Plaza in collaboration with Occupy SF, 3
blocks from the Embarcadero BART station
1:00pm: March through the Financial District to make the banks pay for
the financial crisis they created
4:00pm: People's Assembly for Public Education at the State Building
to call on Gov Brown to make the banks pay public education, 455
Golden Gate Ave San Fransisco
3:00pm early bus returns to UC Berkeley
6:00pm remaining buses return to UC Berkeley
SCHEDULE FOR NOV15 OPEN UNIVERSITY & STRIKE AT UC BERKELEY
8am-5pm: All day Open University activities (teach-outs, workshops,
public readings, installations, etc.) at Sproul Plaza and surrounding
areas.
Noon: Mass convergence at Sproul Hall and formal inauguration of
day-long Open University.
Noon – 2pm: Teach-outs in Sproul Plaza.
2pm: Rally against police violence and other, related forms of
violence, including dispossession, privatization, and debt.
2:30pm: March to Berkeley High and Berkeley City College.
5pm: General Assembly at Sproul Plaza.
The Master Plan In Reverse
Bob Meister from UCSC has written an excellent article on the financialization of the university and the death of the Master Plan. Meister’s research shows that as tuition in the UC system continues to grow and in-state students are replaced with nonresident students, Californian students who in the past would have gone to the UCs or the CSUs are now going to community colleges. However, since the community colleges have also experienced budget cuts and enrollment reductions, a lot of the students who used to go to the community colleges are now going to the for-profit colleges, like the University of Phoenix.
One of the results of this system is that low-income, minority students are being forced to pay high-tuition at low-performing for-profit institutions. In turn, these schools, which often have a graduation rate of under 10%, suck up over a billion dollars in Pell Grants a year as students take out high-interest subprime student loans. Moreover, since these loans are usually guaranteed by the federal government, and they cannot be erased through bankruptcy, there are a safe bet for financial speculators.
In this Reversed Master Plan, the defunding of each system results in higher tuition levels coupled with larger student debts and lower degree production. Not only will students have to work twenty years to pay off their student loans, but they will be unable to pay taxes or to contribute to economic growth. Instead of universities and colleges creating social mobility and reducing economic inequality, they are generating higher levels of inequity. To help change this dangerous path, please come to the UC Regents meeting or the CSU trustees meeting on November 16th and call for a new economic and educational model. You can also sign here a petition to protest police violence during the UC Berkeley demonstrations on November 9th.
One of the results of this system is that low-income, minority students are being forced to pay high-tuition at low-performing for-profit institutions. In turn, these schools, which often have a graduation rate of under 10%, suck up over a billion dollars in Pell Grants a year as students take out high-interest subprime student loans. Moreover, since these loans are usually guaranteed by the federal government, and they cannot be erased through bankruptcy, there are a safe bet for financial speculators.
In this Reversed Master Plan, the defunding of each system results in higher tuition levels coupled with larger student debts and lower degree production. Not only will students have to work twenty years to pay off their student loans, but they will be unable to pay taxes or to contribute to economic growth. Instead of universities and colleges creating social mobility and reducing economic inequality, they are generating higher levels of inequity. To help change this dangerous path, please come to the UC Regents meeting or the CSU trustees meeting on November 16th and call for a new economic and educational model. You can also sign here a petition to protest police violence during the UC Berkeley demonstrations on November 9th.
UC and the 99%
My last few posts have documented the growing wage inequality in the UC system. Like the rest of America, the university is structured by a divide between the people at the top and everyone else. This type of income disparity has motivated the Occupy movement to call for a fairer system, and we are now seeing a series of protests at the UC campuses, which will culminate in a large action at the next UC regents meeting on November 16th.
Already our actions are having an effect. In fact, the LA Times reports that due to the fight back against President Yudof's planned tuition increases, the system has backed off of its plan to increase tuition again for now. Currently, we have to turn our attention to getting the state to raise taxes on the wealthy so that state funding for higher education can be restored.
As the important book, The Spirit Level, reveals, income inequality not only undermines the productivity of an economy, but it helps to generate a host of social problems. According to global statistics, the developed countries with the highest levels of income inequality, also have the lowest levels of social trust, and the highest levels of crime, infant mortality, heart disease, and illiteracy. Even the rich people in unequal societies suffer from increased anxiety due to their constant drive to increase their wealth.
On the other hand, in countries where there is a lower disparity of income, like the Scandinavian nations, people report a higher rate of happiness and health. As The Spirit Level reveals, when people feel that their society is not divided between winners and losers, they support social programs and promote education and subsidized healthcare. However, when wealth inequality grows, social welfare programs are not protected because people do not feel that they are living in a just society.
In the case of the UC system, the growth in the number of high-earning administrators and medical faculty undermines any sense of a shared purpose. Moreover, as medical incomes increase, the cost of healthcare in California also increases. We can also anticipate that as UC moves to a new compensation system for faculty, we will see even more wealth disparity and a reduced sense of social trust. Likewise as income becomes concentrated at the top in California, we witness a decreased desire to support social welfare programs and higher education. In short, wealth inequality is the driving force behind most of our social and economic problems.
Already our actions are having an effect. In fact, the LA Times reports that due to the fight back against President Yudof's planned tuition increases, the system has backed off of its plan to increase tuition again for now. Currently, we have to turn our attention to getting the state to raise taxes on the wealthy so that state funding for higher education can be restored.
As the important book, The Spirit Level, reveals, income inequality not only undermines the productivity of an economy, but it helps to generate a host of social problems. According to global statistics, the developed countries with the highest levels of income inequality, also have the lowest levels of social trust, and the highest levels of crime, infant mortality, heart disease, and illiteracy. Even the rich people in unequal societies suffer from increased anxiety due to their constant drive to increase their wealth.
On the other hand, in countries where there is a lower disparity of income, like the Scandinavian nations, people report a higher rate of happiness and health. As The Spirit Level reveals, when people feel that their society is not divided between winners and losers, they support social programs and promote education and subsidized healthcare. However, when wealth inequality grows, social welfare programs are not protected because people do not feel that they are living in a just society.
In the case of the UC system, the growth in the number of high-earning administrators and medical faculty undermines any sense of a shared purpose. Moreover, as medical incomes increase, the cost of healthcare in California also increases. We can also anticipate that as UC moves to a new compensation system for faculty, we will see even more wealth disparity and a reduced sense of social trust. Likewise as income becomes concentrated at the top in California, we witness a decreased desire to support social welfare programs and higher education. In short, wealth inequality is the driving force behind most of our social and economic problems.
Wage Disparities in the Professorial Ranks
In a previous post, I presented data on wage inequality in the UC system amongst different types of high-earning employees; what I would like to do now is to discuss inequities in the professorial ranks (these statistics do not include medical, law, or business professors).
One way of approaching this data is to first look at the average salaries for assistant, associate, and full professors. For instance, in 2010, there were 3,246 full professors, and their average total compensation was $139,633. Meanwhile, during the same time period, we find 1,322 associate professors with an average gross pay of $117,527, and 984 assistant professors with an average total pay of $76,949.
While the system-wide average gross pay for all academic professors was $116,665 in 2010, if we look at this average on the different campuses, we find the following: UCLA - $137,683; Berkeley - $127,607; San Diego - $118,480; Santa Barbara - $115,349; Davis - $101,903; Riverside - $98,107; Irvine - $107,462; Merced - $88,229; and Santa Cruz - $99,797. Excluding Merced, we see that the difference between the average academic professor salaries at UCLA and Riverside is $39,576 or 34%.
Also, looking historically, we know that in 2004, there were 216 full professors making more than $200,000, and in 2006, the number of high earners dropped to 194, but in 2008, this same category jumped to 380, and in 2010, it went down slightly to 372. Therefore, the number of full professors making over $200,000 nearly doubled between 2006 and 2008 and has since stabilized. Meanwhile, if we look at the salaries of assistant professors during this same period, we find that the number of assistants making less than $70,00 stayed almost the same between 2004 and 2008: there were 577 assistant professors making less than $70,000 in 2004; 553 in 2006; 558 in 2008; and 401 in 2010. These statistics tells us that the salary growth for academic professors was concentrated at the top during the period of 2006 and 2008.
It would be interesting to look at the salary disparities in the different disciplines, but this information is not available. Over all, it appears that the biggest wage disparities occur between the campuses with the highest number of graduate students (UCLA, UCB, UCSD), and the ones with the highest percentage of undergraduates (UCR, UCM, UCSC).
One way of approaching this data is to first look at the average salaries for assistant, associate, and full professors. For instance, in 2010, there were 3,246 full professors, and their average total compensation was $139,633. Meanwhile, during the same time period, we find 1,322 associate professors with an average gross pay of $117,527, and 984 assistant professors with an average total pay of $76,949.
While the system-wide average gross pay for all academic professors was $116,665 in 2010, if we look at this average on the different campuses, we find the following: UCLA - $137,683; Berkeley - $127,607; San Diego - $118,480; Santa Barbara - $115,349; Davis - $101,903; Riverside - $98,107; Irvine - $107,462; Merced - $88,229; and Santa Cruz - $99,797. Excluding Merced, we see that the difference between the average academic professor salaries at UCLA and Riverside is $39,576 or 34%.
Also, looking historically, we know that in 2004, there were 216 full professors making more than $200,000, and in 2006, the number of high earners dropped to 194, but in 2008, this same category jumped to 380, and in 2010, it went down slightly to 372. Therefore, the number of full professors making over $200,000 nearly doubled between 2006 and 2008 and has since stabilized. Meanwhile, if we look at the salaries of assistant professors during this same period, we find that the number of assistants making less than $70,00 stayed almost the same between 2004 and 2008: there were 577 assistant professors making less than $70,000 in 2004; 553 in 2006; 558 in 2008; and 401 in 2010. These statistics tells us that the salary growth for academic professors was concentrated at the top during the period of 2006 and 2008.
It would be interesting to look at the salary disparities in the different disciplines, but this information is not available. Over all, it appears that the biggest wage disparities occur between the campuses with the highest number of graduate students (UCLA, UCB, UCSD), and the ones with the highest percentage of undergraduates (UCR, UCM, UCSC).
New UC Salary Data: 2010 was a Good Year for Higher Earners
New UC salary data is now available at Jeffrey Bergamini’s compensation database, and it reveals that in 2010, there were 4,237 UC employees making more than $200,000 for a total gross pay of $1.26 billion and a base pay of $744 million. This means that for the over 200k club, more than 40% of their pay came from extra pay; moreover, the over $200,000 earners raked in 12% of the gross pay for the whole system ($9.3 billion), while they represented under 3% of the regular employees and less than 1% of the total number of employees (including student workers).
If we compare 2010 to 2008 and 2006, we find that in 2006, there were 2,464 employees making over $200K with a total gross pay of $680 million, while in 2008, there were 3,643 high earners with a total gross salary of $1 billion. In other words, during the UC’s “fiscal crisis,” we have seen a continual increase of employees entering into the over-200K club.
To further investigate who makes up this class of high earners, we can break down these employees into six major categories: administrators, medical faculty, athletic coaches, business school professors, academic professors (excluding business and law professors), and law professors. These six categories accounted for over 95% of the revenue of the over $200,000 club in 2010.
Starting with the medical faculty, we find that in 2010, there were 2,772 medical faculty making over $200,000 for a total gross pay of $867.4 million. This means that in the period of 2008 to 2010, the medical faculty in the over 200k range increased their numbers by 476, while their total gross pay went up $187.4 million. It is clear that the medical centers are an economic powerhouse that drive inequality in the UC system.
The second biggest group in the over-200k club is the administrators. In 2010, we find 351 bureaucrats making a total of $102 million, while in 2008, there were 397 administrators in the over 200k club making a total of $109 million. In other words, due to the downsizing of the Office of the President, there are now fewer administrators in the over-$200,000 club, but their average pay is higher.
The next biggest group of high earners are the academic professors outside of law, medicine, and business. In 2010, there were 397 professors making over $200,000 for a collective gross pay of $93 million. If we compare these figures to 20008, we discover that this group has been reduced by 18 people, and their collective pay has gone down by $3.6 million.
In the case of the business school faculty, in 2008, there were 372 faculty making more than $200,000 for a collective gross pay of $93 million, while in 2010, 439 high-earning professors had a collective gross pay of $115 million. This statistics show that while the number of general campus, high-earning professors has been decreased, the medical and business professors making over $200,000 has continued to increase.
In the case of law professors, we find that in 2008, there were 85 making over $200,000 for a collective pay of $21 million, and in 2010, this same group consisted of 96 professors making a collective gross pay of $25 million. So we once again, we see a trend of increasing the number of high-earning professors in the professional schools, while the nonprofessional school professors are reduced.
The final group is the athletic coaches; in 2008, there were 24 coaches making over $2000,000 for a collective payout of $12.8 million, and in 2010, this same group has 35 employees at a collective gross pay of $16 million. In other words, the athletic departments continue to do well in bad times.
These statistics show that as the university continues to rely increasingly on undergraduate tuition to fund the system, more of the pay is going to people working outside of undergraduate education. Moreover, since the UC is the third biggest employer in California, we can see how the wage disparities in the UC system contribute to the growing wage inequality in the state.
If we compare 2010 to 2008 and 2006, we find that in 2006, there were 2,464 employees making over $200K with a total gross pay of $680 million, while in 2008, there were 3,643 high earners with a total gross salary of $1 billion. In other words, during the UC’s “fiscal crisis,” we have seen a continual increase of employees entering into the over-200K club.
To further investigate who makes up this class of high earners, we can break down these employees into six major categories: administrators, medical faculty, athletic coaches, business school professors, academic professors (excluding business and law professors), and law professors. These six categories accounted for over 95% of the revenue of the over $200,000 club in 2010.
Starting with the medical faculty, we find that in 2010, there were 2,772 medical faculty making over $200,000 for a total gross pay of $867.4 million. This means that in the period of 2008 to 2010, the medical faculty in the over 200k range increased their numbers by 476, while their total gross pay went up $187.4 million. It is clear that the medical centers are an economic powerhouse that drive inequality in the UC system.
The second biggest group in the over-200k club is the administrators. In 2010, we find 351 bureaucrats making a total of $102 million, while in 2008, there were 397 administrators in the over 200k club making a total of $109 million. In other words, due to the downsizing of the Office of the President, there are now fewer administrators in the over-$200,000 club, but their average pay is higher.
The next biggest group of high earners are the academic professors outside of law, medicine, and business. In 2010, there were 397 professors making over $200,000 for a collective gross pay of $93 million. If we compare these figures to 20008, we discover that this group has been reduced by 18 people, and their collective pay has gone down by $3.6 million.
In the case of the business school faculty, in 2008, there were 372 faculty making more than $200,000 for a collective gross pay of $93 million, while in 2010, 439 high-earning professors had a collective gross pay of $115 million. This statistics show that while the number of general campus, high-earning professors has been decreased, the medical and business professors making over $200,000 has continued to increase.
In the case of law professors, we find that in 2008, there were 85 making over $200,000 for a collective pay of $21 million, and in 2010, this same group consisted of 96 professors making a collective gross pay of $25 million. So we once again, we see a trend of increasing the number of high-earning professors in the professional schools, while the nonprofessional school professors are reduced.
The final group is the athletic coaches; in 2008, there were 24 coaches making over $2000,000 for a collective payout of $12.8 million, and in 2010, this same group has 35 employees at a collective gross pay of $16 million. In other words, the athletic departments continue to do well in bad times.
These statistics show that as the university continues to rely increasingly on undergraduate tuition to fund the system, more of the pay is going to people working outside of undergraduate education. Moreover, since the UC is the third biggest employer in California, we can see how the wage disparities in the UC system contribute to the growing wage inequality in the state.
Yudof’s Salary Plan: What does it Really Mean?
In August, President Yudof announced a plan for merit increases for non-represented staff making less than $200,000 and for faculty who have been deemed meritorious. The initial idea was to reward people who have not gotten raises during the last few years. Yudof also wants to give the campuses the ability to stop other universities from stealing UC faculty; however, this plan is full of unanswered questions.
Coupled with the new merit-based 3% salary increase, we find a new policy that will allow faculty to use grant money and other external sources of income to increase their base salaries. A good discussion of this plan can be found at Remaking the University, but it is important to stress that in reality, there are four main ways that people in the UC get increased compensation: across the board salary increases, merit pay, special compensation pools, and negotiated compensation. During the last few years, some represented employees have gotten salary increases, while many other employees have continued to receive merit increases. Furthermore, the medical centers and other units have developed their own special compensation pools, while non-represented faculty and administrators have continued to get renegotiated compensation deals.
In fact, except for across the board salary increases, most of the compensation increases are handled on the campuses on an ad hoc basis, and it does not look like this system is changing. Moreover, in the current move to let the campuses keep all of their revenue, it is unclear what Yudof’s salary plan means. Is the Office of the President going to distribute state funds to the campuses in a special merit pool, or is the idea to simply instruct the campuses to allow staff and faculty to compete for a share of their local revenue?
If we look at the facts on the ground, we discover that professors and administrators often get their compensation increases through private negotiations. As the past Academic Council Chair Dan Simmons wrote a few years back in his study, “The Death of the UC Salary Scales,": "At least one campus has provided off-scale salaries to 100 percent of its new faculty appointments. Some campuses are utilizing devices to broadly provide off-scale enhancements to faculty in order to regularize the salary inversions that result from hiring new faculty with off-scale salaries exceeding the compensation of full professors. One or more campuses utilize a shadow salary scale to reflect market level compensation.” In other words, many--if not most--of the non-represented faculty do not get their raises through merit reviews or movements up the salary scale; instead, increases are negotiated through private deals between professors and administrators. In fact, Simmons pointed out that 85% of the professors are being paid off of the official salary scale.
As Simmons argued, the current system has many flaws: “The evolution of a system that compensates faculty who are newly appointed, or who threaten to leave and are retained with off-scale salary increments, replaces the historic peer reviewed compensation system with a system that is individually negotiated with campus administrators who have the discretion to grant or deny a salary increment. A step IV professor in one place is no longer on the same playing field as a step IV professor in another place, perhaps as close as across the hall in the same department. Indeed, the step IV professor might discover that his or her new colleague recently hired as an assistant professor is earning a higher salary.” Not only are some new faculty getting higher pay than faculty members who have been teaching for several years, but the off-scale system circumvents the merit review and peer review process. It also creates collusion between individual faculty members and administrators.
As I have pointed out before, the end result of the current system is incredible inequality within the professorial ranks, with some faculty members getting $40,000 raises and some getting nothing. While we have been told that the faculty senates have been working on this problem, there is no evidence that a new system and culture has been implemented. In fact, the Office of the President has been pushing a market-based system that Simmons previously critiqued in the following way: “The market approach to setting individual salaries says several things to a faculty member who has loyally done his or her job and progressed through the salary ranks on a regular basis. First, you are a fool for not having sought to move elsewhere with a higher salary in order to negotiate an off-scale at home. Not only are you a fool, your work must be worth less than the person across the hall newly hired with an off-scale that is higher. Second, the first thing you should do is look for an appointment at another university. The position might be more attractive in any event than working in a place that does not appreciate your efforts. Third, the University must be more interested in bringing in new superstars with expensive start up packages than maintaining the loyalty of its current faculty base.” Thus, in order to compete with private universities for professors and administrators, the university is forced to renegotiate salaries in a secretive and individualized manner. In this system, certain people are deemed market worthy, while others see their wages stagnate.
By arguing in his letter that the new pool of money should be used to recruit and retain faculty who are being “courted by competing institutions,” Yudof is signaling to the campuses that they should continue to negotiate secret deals with their stars and potential stars. While some may prosper from this system, many will actually see their compensation go down as they pay more for healthcare and pension. However, since everyone wants to be a star, no one will rock the boat, and the majority will suffer. Like our national economy, wealth inequality grows because the majority of people think they will profit from a system that screws them.
Coupled with the new merit-based 3% salary increase, we find a new policy that will allow faculty to use grant money and other external sources of income to increase their base salaries. A good discussion of this plan can be found at Remaking the University, but it is important to stress that in reality, there are four main ways that people in the UC get increased compensation: across the board salary increases, merit pay, special compensation pools, and negotiated compensation. During the last few years, some represented employees have gotten salary increases, while many other employees have continued to receive merit increases. Furthermore, the medical centers and other units have developed their own special compensation pools, while non-represented faculty and administrators have continued to get renegotiated compensation deals.
In fact, except for across the board salary increases, most of the compensation increases are handled on the campuses on an ad hoc basis, and it does not look like this system is changing. Moreover, in the current move to let the campuses keep all of their revenue, it is unclear what Yudof’s salary plan means. Is the Office of the President going to distribute state funds to the campuses in a special merit pool, or is the idea to simply instruct the campuses to allow staff and faculty to compete for a share of their local revenue?
If we look at the facts on the ground, we discover that professors and administrators often get their compensation increases through private negotiations. As the past Academic Council Chair Dan Simmons wrote a few years back in his study, “The Death of the UC Salary Scales,": "At least one campus has provided off-scale salaries to 100 percent of its new faculty appointments. Some campuses are utilizing devices to broadly provide off-scale enhancements to faculty in order to regularize the salary inversions that result from hiring new faculty with off-scale salaries exceeding the compensation of full professors. One or more campuses utilize a shadow salary scale to reflect market level compensation.” In other words, many--if not most--of the non-represented faculty do not get their raises through merit reviews or movements up the salary scale; instead, increases are negotiated through private deals between professors and administrators. In fact, Simmons pointed out that 85% of the professors are being paid off of the official salary scale.
As Simmons argued, the current system has many flaws: “The evolution of a system that compensates faculty who are newly appointed, or who threaten to leave and are retained with off-scale salary increments, replaces the historic peer reviewed compensation system with a system that is individually negotiated with campus administrators who have the discretion to grant or deny a salary increment. A step IV professor in one place is no longer on the same playing field as a step IV professor in another place, perhaps as close as across the hall in the same department. Indeed, the step IV professor might discover that his or her new colleague recently hired as an assistant professor is earning a higher salary.” Not only are some new faculty getting higher pay than faculty members who have been teaching for several years, but the off-scale system circumvents the merit review and peer review process. It also creates collusion between individual faculty members and administrators.
As I have pointed out before, the end result of the current system is incredible inequality within the professorial ranks, with some faculty members getting $40,000 raises and some getting nothing. While we have been told that the faculty senates have been working on this problem, there is no evidence that a new system and culture has been implemented. In fact, the Office of the President has been pushing a market-based system that Simmons previously critiqued in the following way: “The market approach to setting individual salaries says several things to a faculty member who has loyally done his or her job and progressed through the salary ranks on a regular basis. First, you are a fool for not having sought to move elsewhere with a higher salary in order to negotiate an off-scale at home. Not only are you a fool, your work must be worth less than the person across the hall newly hired with an off-scale that is higher. Second, the first thing you should do is look for an appointment at another university. The position might be more attractive in any event than working in a place that does not appreciate your efforts. Third, the University must be more interested in bringing in new superstars with expensive start up packages than maintaining the loyalty of its current faculty base.” Thus, in order to compete with private universities for professors and administrators, the university is forced to renegotiate salaries in a secretive and individualized manner. In this system, certain people are deemed market worthy, while others see their wages stagnate.
By arguing in his letter that the new pool of money should be used to recruit and retain faculty who are being “courted by competing institutions,” Yudof is signaling to the campuses that they should continue to negotiate secret deals with their stars and potential stars. While some may prosper from this system, many will actually see their compensation go down as they pay more for healthcare and pension. However, since everyone wants to be a star, no one will rock the boat, and the majority will suffer. Like our national economy, wealth inequality grows because the majority of people think they will profit from a system that screws them.
UC Announces New Pension Rates
At the next UC Regents meeting, the Office of the President will ask the Regents to endorse new pension contribution rates. According to this"> proposal, starting in July 2013, current employees will pay 6.5% of their salary into UCRS, and the UC will put in 12%. For people hired on or after July 1 2013, they will pay 7%, while the UC will pay 12%. Of course, these changes will have to be negotiated for represented employees.
One interesting aspect of this is that the university has decided to contribute 12% for the people in both the new and old plan. This means that while people in the new plan will receive a reduced benefit, the university does not have an immediate incentive to fire current workers and replace them with new hires, which often happens when a new pension tier requires a lower employer contribution. However, over time, the people in the new system will cost the university less.
Ultimately, new hires will be paying more and getting less, and this inequality will help to reduce the university’s long-term liability. Moreover, for the next three years, much of the increased contributions from employees may be matched with new salary increases, and so the university will not increase its revenue from these changes. In fact, the move to a 12% employer contribution coupled with a 3% salary increase this year and a possible additional 3% next year will mean that the UC will see its compensation costs increase by 11% in the next two years (the UC currently contributes 5% to the pension plan). The long-term plan is to increase the employer contribution by 1% each year until they reach 16%.
Once the UC starts paying 16% of covered compensation, it will cost the university over $1 billion a year to fund the normal cost of the pension plan. Furthermore, the UC still has to deal with escalating retiree healthcare costs and the fact that the state still does not contribute to the pension plan. I predict that the university will seek savings by continuing to shift more of the cost for healthcare and retiree healthcare to the employees. Without a significant change to recent healthcare legislation, workers inside and outside of the university will continue to see their total compensation decrease.
One interesting aspect of this is that the university has decided to contribute 12% for the people in both the new and old plan. This means that while people in the new plan will receive a reduced benefit, the university does not have an immediate incentive to fire current workers and replace them with new hires, which often happens when a new pension tier requires a lower employer contribution. However, over time, the people in the new system will cost the university less.
Ultimately, new hires will be paying more and getting less, and this inequality will help to reduce the university’s long-term liability. Moreover, for the next three years, much of the increased contributions from employees may be matched with new salary increases, and so the university will not increase its revenue from these changes. In fact, the move to a 12% employer contribution coupled with a 3% salary increase this year and a possible additional 3% next year will mean that the UC will see its compensation costs increase by 11% in the next two years (the UC currently contributes 5% to the pension plan). The long-term plan is to increase the employer contribution by 1% each year until they reach 16%.
Once the UC starts paying 16% of covered compensation, it will cost the university over $1 billion a year to fund the normal cost of the pension plan. Furthermore, the UC still has to deal with escalating retiree healthcare costs and the fact that the state still does not contribute to the pension plan. I predict that the university will seek savings by continuing to shift more of the cost for healthcare and retiree healthcare to the employees. Without a significant change to recent healthcare legislation, workers inside and outside of the university will continue to see their total compensation decrease.