A lot of people have questioned the anger of students over fee hikes and their targeting that anger toward the chancellor, the regents and UC President Mark Yudof. After all, it can be argued – as many have – that the real culprit in the fee hikes is not the University of California but rather the state legislature.
It was for these reasons I tended to view with skepticism claims from student protesters in the past that the blame lies with the UC Regents, chancellor, and Office of the President. After all, they are operating in the world created by legislative funding priorities. And while executive salaries are obscene in the UC System – justifiable or not – the total costs almost certainly amount to what is a small molehill in the mountain of budgetary realities.
After all, even if the salaries of upper administration are bloated, cutting executive salaries is not going to fix the budget problems. And while the work that some of the labor groups have presented on internal shifting of funds is somewhat intriguing, overall, the cuts by the legislature are outstripping the ability of the universities to meet their overhead through salary cuts.
But my thinking is starting to change on all of this.
Last week’s story on UC Davis’ economic impact points to perhaps another way.
The story goes that UC Davis “is a powerful economic engine for Northern California, generating $6.9 billion in annual economic activity and accounting for 69,000 jobs.”
The report goes on to suggest that jobs created at UC Davis lead to additional jobs in other sectors of the economy, and that “Northern California benefited from an additional $1.10 to $1.40 in secondary economic activity.”
Overall, UC Davis’ two campuses — in Davis and Sacramento — constitute the second-largest individual employer in the Sacramento region, behind only the State of California.
“UC Davis is a significant catalyst for economic activity throughout our region and across the state,” said Chancellor Linda Katehi. “It is gratifying to see that the investments made in the university will pay off not only in the long term — with a highly educated workforce and the discoveries and innovations that will help us to address the globe’s most pressing problems. These investments also have an immediate, positive and profound impact on the economic prosperity of California.”
The problem may be that what we lack is not money so much as imagination, creativity and ingenuity.
Chancellor Katehi has some grand visions for UC Davis. She envisions generating $1 billion in fundraising. She envisions expanding the scope of UC Davis greatly, to bring it to upwards of 40,000 students.
What is missing is a plan to capture some of that revenue and some of that economic engine to benefit the students.
At a very basic level, this economic analysis demonstrates that both the state and the Sacramento region benefit from the economic engine that is UC Davis. And if this region and state benefit from UC Davis, then other parts of the state likely benefit from the presence of other campuses of UC students.
The state and region are perfectly willing to benefit from that influx of capital and that economic engine, but also perfectly willing to continue to slash funding and make affordability a much less achievable goal for students.
In as much as Chancellor Katehi has been under fire from students, she has a chance to make some amends if she modifies her grandiose visions of UC Davis to capture some of that economic revenue for the students.
In summary then, students should be angry and frustrated because what has happened is that the University of California really is becoming more privatized, and it is ironic that the Occupy Wall Street movement has moved to campuses for the very reason that the campuses themselves are starting to look and act like Wall Street.
Observe: those at the very top are making tremendous salaries. Those who try to justify those salaries, based on the notion of competitiveness, are forgetting that people do not go into service at public institutions for that type of personal gain.
Moreover, at the same time tuition and fees have gone up, those at the very top are getting pay raises and sometimes bonuses.
The system is increasingly top-heavy and operating for the benefit, not of public education, which is after all the mission of a public education system, but for the benefit of the entity itself. Wealth and power is being amassed at the top and done so on the backs of the students who are being asked to pay an ever-increasing burden.
The bottom line is that there should be enough money in the system to produce ways to capture portions of that money to go back into the system and prevent the students from having to pay the burden that they currently are paying.
The ambition of Linda Katehi should be used in part to ease the burden of students. After all, if the university can raise $1 billion, if the university generates nearly $7 billion each year, it seems reasonable that students should see some direct benefit from that success.
Instead, what we see with the University of California is a microcosm of our entire economy – the middle class increasingly pays the burden, even as those at the top accrue more and more benefit from being at the top.
—David M. Greenwald reporting
[quote]What is missing is a plan to capture some of that revenue and some of that economic engine to benefit the students.[/quote]
Bingo!
Some good minds need to really think about this!
You have to look hard for the data, but…
In the 1998-1999 school year the total UC operating budget was $9.322 billion and total UC enrollment was 178,410; this is $52,252 per student. In the 2009-2010 school year, the total UC operating budget was $18.952 billion and the enrollment was 234,464; this is $80,831 per student. The inflation is 54.70% compared to the CPI of 30.88% for the same twelve year period.
The 2011-2012 budget is $22.5 billion and enrollment is projected at around 245,000. This inflated the operating budget per student to a staggering $91,836. This during a time when inflation is at an all time low.
There is no doubt that – beginning early 1990 – that tax contributions from the state to the UC system started to decline. Note that this decline started BEFORE the economy crashed and California should have been tax-rich enough to continue to fund education at historical levels. However, that point aside, with evidence of operational costs per student significantly exceeding the rate of inflation, it is clear that the UC system is blowing up its fiscal house by its own mismanagement. Instead of seeing cost increase much faster than the rate of inflation, we should be experiencing a lowering of the administrative/operational cost per student as a well-managed industry would realize a lower cost per unit through economies of scale. The way the data charts, a growing UC will continue to inflate student costs much faster than the rate of inflation. Said another way, with the current business model and management practices, growing the student population will only make education more expensive for UC students.
In private business, contraction and refocus is always a viable alternative strategy to growth if the goal is to survive to compete another day. It appears that with public-funded higher education, the big academic egos of the college ruling class cannot accept anything but continued expansion of their empire at the expense of the students. They are hell-bent on accumulating prestige at all costs.
I fear these leaders are steering their industry to a total collapse of affordability and confidence. Watch carefully what they do in desperation as this story continues to unfold.
See the following…
[img]http://www.cscdc.org/miscjeff/UCInflate.jpg[/img]
Note the big jump in the 2000-2001 year.
[quote]There is no doubt that – beginning early 1990 – that tax contributions from the state to the UC system started to decline. Note that this decline started BEFORE the economy crashed and California should have been tax-rich enough to continue to fund education at historical levels. However, that point aside, with evidence of operational costs per student significantly exceeding the rate of inflation, it is clear that the UC system is blowing up its fiscal house by its own mismanagement. [/quote]
Let me ask a really basic question. Did the inflated costs per student happen as a result of the state not kicking in as much money? In other words, I guess what I am asking is, did the operating budget balloon beyond the rate of inflation as a direct/indirect result of the state not kicking in as much money as it previously had? Or can you say that the two issues are completely unrelated?
Elaine, I don’t know the answer to that. However, the reduction in state subsidy to the UC system started in 1990, so I don’t see any correlation with this jump of operating expenses. Looking at the budget, it just looks like a jump in general expenses across the board.
The state subsidy went from $2.317 billion to $2.913 billion during that period. It went up, but so did enrollment. The result is a lower per-student funding.
I just posted this as a response to our old Vanguard posting friend Greg Kuperberg challenging my facts in an Enterprise opinion letter:
[quote]Greg, isn’t it fair to state that the University expanded research and undergraduate programs – in effect expanded UCD prestige – having lived off the previous state funding for the undergraduate programs? I read recently that the Medical Center had record profits this last year. Why aren’t those profits returned to help fund undergraduate instruction and provide tuition relief?
The accounting for all of this that you report as being clearly delineated (i.e. undergraduate studies versus research), are, in fact, largely muddled. For example, the university does not account for the added administrative/operational costs for infrastructure and support services for staff involved in research.
I’m not aware of any legislation that requires all program funds to be restricted. The accounting is done on one set of books. All programs are managed under one set of administrative management. It looks to me like a convenient shell game forcing undergraduate students to be the pawns in a political funding war while the senior UC employees and faculty get their gravy protected by arbitrary fund restrictions.
Your response to my article begs the question: “what would you do?” My suggestion is for the UC system to go lean and run research and undergraduate programs as a profit center to help fund undergraduate programs. It seems you are just protecting the status quo.[/quote]
I’m curious what the ratio of State subsidy to operation budget was in the 1960’s or 1970’s versus the recent decades. I have a hunch that is the real tragedy for the students here, but I have not seen the actual numbers. Anyone know?
Its interesting that the administrative overhead started to balloon since the late 90s, shortly after and during transition to replacement of most all paper transactions by electronic computer transactions.
Any comments on this, or why the rapid growth in administrative staff over the past ~20 years?
Certainly there are a lot of IT staff around now (and I’m glad they are) to keep the electrons flowing smoothly; very few were needed until late 1980s I beleive. And certainly most admins need to get proficient at a number of different software applications; training and learning time?
Because so many things can be tracked electronically; have we drastically increased tracking of smaller transactions that previously were not itemized so succinctly? Is this worth the time and trouble?
Or just more rules and regulations and general complexity in running departments?
I do know the admins in my department are very busy; less general socializing with faculty and researchers than a decade ago, everyone is too busy for this.
One thing to consider… many of the administrative functions serve employees that are fully or partially dedicated to the research side of the university. This is one way that general expenses inflate at the expense of undergraduate instruction. For example, how many additional HR and facilities employees are required to support UCD expansion in the research areas?
It does not make sense to have two HR departments: one for staff serving undergraduate instruction and another for employees serving the research business of UCD. However, there needs to be a more sophisticated accounting of the costs related to these business functions as their core revenue is restricted. Research needs to adequately fund these functions so it is not a drain on general operations budgets that could otherwise be used to help defray undergraduate costs/fees.
I have that same challenge in my business facilitating multiple government loan programs with a single staff. I have been required to develop a model that apportions out administrative expenses to each of the programs. This is used for budgeting and strategic decision-making since otherwise management would be flying blind as to the real costs of the various programs.
If they don’t split off the Med Centers then these figures are meaningless.
About half the UC Davis budget goes to the Med Center. Medical cost inflation has been very high, I believe. And growth in the Medical area doesn’t lead to growth in the number of students.
[quote]Elaine, I don’t know the answer to that. However, the reduction in state subsidy to the UC system started in 1990, so I don’t see any correlation with this jump of operating expenses. Looking at the budget, it just looks like a jump in general expenses across the board. [/quote]
My guess is that bc of the way the university does its “accounting”, we will never know the answer to a lot of the questions posed by commenters above. As you say, it has become a shell game, moving money around, convenient silos built so money for one thing cannot be spent on another, and so forth. Quite frankly there needs to be more accountability. I drive around the campus and see building going on; yet student fees are ratcheting up to astronomical levels. But of course funding for building cannot be spent on operations – the old “silo” effect. What the public needs to demand and get is greater transparence; accountability. Enough of the silo nonsense.
A prime example of this is the courts. As I understand it, a group of judges actually complained about new courts being built while court staff were being laid off. What good does it do to build a new courthouse if there is no one to staff it? These complaining judges made good sense. What the judges were saying I believe, was lets take the building silo funding, and put that money towards keeping the court staff we had. Makes perfect sense to me. Just bc money is placed in a silo doesn’t mean during emergency situations that money cannot be taken out of a particular silo and used where it is most needed…
And if UCD is such a great economic engine, then some of that largesse should be boomeranging back to the benefit of the students so their tuition isn’t so high…