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UC Budget Crisis

UC Budget Crisis. Akos Rona-Tas, UC San Diego. Exceptional Quality. Washington Monthly ’s ranking UCB, UCSD, and UCLA are top in , based mainly on Social Mobility (recruiting and graduating low-income students), and Research (cutting-edge PhDs).

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UC Budget Crisis

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  1. UC Budget Crisis Akos Rona-Tas, UC San Diego

  2. Exceptional Quality • Washington Monthly’s ranking • UCB, UCSD, and UCLA are top in, based mainly on Social Mobility (recruiting and graduating low-income students), and Research (cutting-edge PhDs). • U.S. News and World Report ‘s ranking of public schools • UCB 1st, UCLA 2nd, UCSD 7th, and 3 more in top 20 • The Academic Ranking of World Universities by Shanghai Jiao Tong University • Four UC campuses in the top 20 in the world (UCSD ranked 14th) • Excellence in research • 11 Nobel Prizes in the last 10 years • 2009 Elizabeth Blackburn, UCSF, biology, Oliver Williamson, UCB, economics • 2008 Roger Y. Tsien, UCSD, chemistry • 2004 Irwin Rose, UCI, chemistry, Finn Kydland, UCSB, economics, David Gross, UCSB, physics • 2003 Clive Granger, UCSD, economics, • 2001 George Akerlof, UCB, economics, • 2000 Herbert Kroemer, UCSB, physics, Alan Heeger, UCSB, chemistry, Daniel McFadden, UCB, economics • Currently • 33 Nobel prize winners, the highest at any university (8 @ UCSD) , • 5 Field Medalist (1 @UCSD), • 13 National Medal of Science laureates (3 @UCSD), • 25 McArthur fellows (8 @UCSD) • UC library system has 34 million items and is one of the largest collections in the world • UC researchers create 3 new patents a day

  3. Strong Demand • Numbers are on UC’s side: • California is 48th in the proportion of high school graduates going to 4-year college • Number of high school graduates remains high and stable

  4. Basic Facts about UC • Annual general operating budget of UC is $19 billion • -- a little less than the entire economy of countries like Panama, El Salvador or Jordan • -- a little more than the entire economy of Bolivia, or Paraguay or Iceland • The “Core Funds” that pay for the core mission of UC: instruction, research and public service is $5.6 billion • Originally, in 2008-2009, $3.2 billionof that was expected to come from the State of California • UC has 220,000 students • Princeton 7,334, Stanford 15,000, University of Michigan 41,000, University of Illinois 41,500 • CSU has 433,000 and CCC 1,628,000 (http://www.cpec.ca.gov/SecondPages/DetailedData.asp) • UC has 170,000 faculty and staff • size of Walgreen and Pepsi Co., • it would be in the top 25 biggest US companies UC has been defunded since 2001 Slow, gradual cuts 2001-2008 Dramatic, giant cuts 2009-2010

  5. The Funding of UC UC Core Funds The University’s “core funds,” comprised of State General Funds, UC General Funds, and student fee revenue, provide permanent support for the core mission activities of the University: instruction, research, and public service, as well as the administrative and support services needed to carry out these activities. Totaling $5.6 billion in 2008-09, these funds represent 28% of the University’s total budget. • UC General Funds • In addition to State General Fund support, certain other fund sources are unrestricted and provide general support for the University’s core mission activities. Collectively referred to as UC General Funds, these include: • - a portion of overhead on federal and state contracts and grants; • - DOE laboratory operations overhead and management; • nonresident tuition; • fees for application for admission and other fees; • a portion of patent royalty income; and • interest on General Fund balances. • Based on recent trends and nonresident enrollment projections and tuition levels, the University expects to generate $594 million in UC General Funds during 2008-09. The largest sources of UC General Funds are nonresident tuition, accounting for $257 million, and indirect cost recovery on federal contracts and grants, totaling $252 million in 2008-09. Comment: The UC charts do not reflect the big cut in 2009 Source: http://budget.ucop.edu/rbudget/200910/2009-10BudgetforCurrentOperations-BudgetDetail.pdf HEPI=Higher Education Price Index Comment: In the chart to the left student fees are net of financial aid.

  6. Student Fees

  7. Return-to-Aid Comment: Aid includes loans and gift aid.

  8. Access the total cost of attendance: resident student fees, living and personal expenses, costs related to books and supplies, transportation, health care

  9. Student-FacultyRatio Since 1994, the University has maintained a budgeted student-faculty ratio of 18.6:1. Before the cuts of the early 1990s, the University’s student-faculty ratio was 17.6:1; the deterioration in the ratio represented about 500 faculty members.

  10. Faculty Pay and Pension Eight percent pay cut Hiring freeze Slow loss of top faculty Cut in staff Comment: This does not reflect the 2009 cut the green line shows what should have happened but did not.

  11. Comment: This chart was compiled around October 2008 and it does not reflect recent losses.

  12. Administration (Institutional Support) Comment: The text indicates elsewhere that the budget of UCOP is around 280 million (p.107). Of that 57 million is being cut but 26 million of the cut is redirected to the campuses. • Institutional Support • Services provide the administrative infrastructure for the University’s operations. Grouped into five broad categories, institutional support activities include: • - Executive Management — offices of the President, Vice Presidents, Chancellors, and Vice Chancellors; planning and budget offices; • - Fiscal Operations — accounting, audit, and contract and grant administration; • - General Administrative Services — computer centers, information systems, and personnel; • - Logistical Services — purchasing, mail distribution, and police; • Community Relations — development and publications. • Comment: Institutional Support does not include academic support or operation and maintenance of plant.

  13. The California State Budget Note: UC and CSU excluding Community Colleges Notes: IHSS (In Home Supportive Services) -- in home care, DDS (Department of Developmental Services) – disability care, Medi-Cal -- healthcare for the poor Source: http://www.ebudget.ca.gov/pdf/Enacted/BudgetSummary/FullBudgetSummary.pdf

  14. California State Budget • Higher education has been underfunded to compensate for increased funding needs in two main areas: • Healthcare • Rising healthcare costs, large uninsured population • Prisons • In 2009: 173,000 inmates • 1977 [before the War on Drugs] 20,000 inmates, • in 1994 [before the Three Strikes law] 125,000 inmates • 31,000 correctional officers – highly organized lobby • $46,000/year is spent on one inmate • Compare: $9,560/year spent on one UC student • Average gross pay of a correction officer is $72,000 • This is the pay of an Associate Professor at UC

  15. The Recent Cuts At the end of 2008-09 the state cut $814.1 million, but gave back$716 million from the stimulus package. After adjusting for cost increases on the expense and fee increases on the revenue side, the total cut to the core funds was $240.7 million. This year, there will be another $637.1 million cut. After adjusting for everything, including fee increases ( $452.9 million), in two years, $776 million was taken from the core funds. This is $3,500 per student on top of the tuition increase.

  16. Arguments for Privatization • Efficiency arguments • State subsidies make universities less competitive • Lower quality • more private universities in the top ranks • countries with larger sector in higher education have more top ranked universities • More waste • universities spend on unnecessary things – administration, nice dorms etc. • More useless subjects • No pressure to produce useful skills • Less motivation • Free tuition make students appreciate education less • Fairness arguments • The main beneficiary is the student • the student should pay • State subsidies are unfair taxation • Everyone pays taxes, mostly the middle and upper middle class go to college: take from the poor and give to the rich • Freedom arguments • Students are more free • can choose from more options • Professors are more free • state cannot interfere with teaching

  17. Making UC Private(i.e. Primarily Self-financed) • Two ways to balance our budget • Raising revenue • Raise tuition • -- to $23,000 to replace the state’s entire contribution up to 2008 levels • -- to $28,000 to do the same up to 2001 levels (the last “good year”) • Differentiate tuition • Increase number of out-of-state students • Increase other revenues • Summer utilization of campuses • EAP • Foreign campuses • Private donors • Corporate sponsorship • Cutting costs • Larger classes • More non-ladder rank faculty • Distance learning

  18. Arguments Against Privatization and Keeping UC Public • Efficiency Argument • Inefficient market: the market does not necessarily know best • universities should not be limited to teaching knowledge that seems practical and in high demand at the moment – we need both Einstein and accounting • Must not just focus on short term demand that changes rapidly • Must provide basic skills useful in the long term – including critical thinking • different instructional cost of different disciplines • the quality of university instruction is hard to gauge – race to the bottom • Compete amenities? Entertaining classes? Sports team? Parties? Why not sell grades? • Fairness Argument • Public benefits – students should not bear the main burden • more students with college degrees: • less unemployment, crime, healthcare expense, • more inventions, better technology, less expensive work force, higher economic growth, higher real estate value, • also more civic volunteering, political participation, better public schools • Access – should depend only on merit • the poor and the historically underrepresented will lose access • Freedom argument • Students’ choices will be limited to schools they can afford • Profs will have less freedom -- corporations will call the shots

  19. Keeping UC Public • Proposals to increase state revenue: • Tax on oil drilling -- $1-2 billion • Raising the vehicle license fee -- $0.5 billion • Tax on tobacco -- $1 billion • Restoring tax breaks given to large corporations in February 2009 – $2.5 billion • Restoring budget priorities • Pass healthcare reform! • Criminal justice reform • Abolishing the 2/3 majority rule established by Prop 13 in 1978 – by a new proposition • To put a proposition on the ballot: 8% (for a constitutional amendment) or 5% (for a statute) of the number of people who voted in the most recent election for governor must sign a petition. • Federalization of some campuses (Birgeneau-Yeary plan)

  20. Useful Web sites • UCSD • http://savingucsd.ning.com/ • http://blink.ucsd.edu/sponsor/budgetline/index.html • UCLA • http://savingucla.ning.com/ • UCOP • http://www.ucop.edu/ • Professor Christopher Newfield’s blog • http://utotherescue.blogspot.com/ • Professor Charles Schwartz’s site • http://universityprobe.org/

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