Update on Campus Funds

I have recently updated my information on how much each campus is funded per student to include the latest 2009-10 information. As I have previously pointed out, UCOP redistributes state funds to the campuses in a very unequal way, and although they are now going to let the campuses keep their student fees and tuition, most of the uneven distribution is in the allocation of state funds. Leaving aside UCSF for the moment, the biggest differences are between UCSC and UCLA. In 2009-10, UCLA received $29,775 per student ($11,720 in tuition and $18,035 from the state), while UCSC only got $16,516 per student ($8,461 from tuition and $8,055 from the state). (I have deducted financial aid from all of these figures). For a spreadsheet on all of the campuses click here.

While UCSF received $12,189 in tuition and $76,120 per student from the state for a total of $88,309 per student, the average of the other campuses was $9,825 from tuition/fees and $13,280 from the state for a total of $23,108 per student. It is important to point out that these amounts do not include funding from the campuses� general funds, and the state support does not include Cal Grants. I would also like to add that the average financial aid per student dollar is 21% and not 33%, which the university often claims.

These statistics bring up several questions. First of all, why doesn�t the state and the UC administration differentiate between undergraduate and graduate costs and revenues in its statistics? A related question concerns whether it is ethical and even legal for students and parents to pay for tuition on one campus when the funds are spent on another campus? Also, it appears that the different cost between undergraduate and graduate education only accounts for part of the differential funding of the campuses, and so we must ask, what else determines this redistribution of wealth?

As I have argued before, this system of UCOP redistributing funding is even more important than the level of support of funding from the state. While we need to maintain our state support, we have to realize that even if the state increases UC funding, UCOP might still starve some of the campuses. Furthermore, during this time of decreased state funding, it becomes even more vital to demand transparency and fairness in the distribution of resources.

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The New Funding Model for the UC System

It looks like UCOP will allow the campuses to keep all of the revenue they generate and then charge each campus unit a 1.6% tax on all fund sources; however, the UC has not decided how to distribute state funds. One reason why it is easier to let the campus keep their tuition and fees than it is to let them keep their state funds is that UCOP has been giving certain campuses a much greater share of state funds compared to other campuses. In fact, in 2007-8, UCLA got $10,602 in student fees/tuition per student, but Santa Cruz only got $7,658. However, if we look at state funds per student, the spread is even larger: UCLA got $18,754 and Santa Cruz received $7,763. In other words, an even distribution of state funds would hurt campuses like UCLA more than an even distribution of student fees and tuition. It should also be pointed out that UCSF got over $61,00 per student from the state in 2007-8 (this is the last year I have solid statistics for, but there is no indication that anything has changed).

While the administration has sought to keep everyone�s focus on the reduction of state funding, a bigger issue is how the Office of the President redistributes state funds. It is also clear that the campuses receiving the largest state funding per student (UCLA � $18,754, UCD - $16,055, and UCB � $14,788) will use their power and size to fight to retain their extra funding. Moreover, if the state cuts the UC budget by $1 billion next year, the fight over the shrinking pie will become even more intense. While the figures used above are only slightly higher than the funding per student in 2010-11, a state cut of $1 billion would reduce state funding per student by 25%. In turn, if tuition and fees make up for the loss of state funds, and campuses keep all of their revenue, the campuses bringing in the most nonresident students will be able to increase their funding relative to the other campuses.

One thing the current funding system reveals is that undergraduate students at UCSC, UCR, UCI, and UCSB have been subsidizing graduate students and research at UCLA, UCB, UCSD, and UCD. While the university likes to claim that undergraduate students benefit from the research done on their campuses, it is unclear how students at UCSC benefit from research performed at UC Davis.

I predict that UCOP will use the current state funding reductions to stall on distributing state funds in a more equitable manner, and the result will be that wealthier campuses will become even wealthier, and they will use their power and income to prevent a fairer distribution of funds. It appears that everything falls to the top in our trickle-up economy.

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Online Education and the End of UC Education

As the UC moves to put high-enrollment courses online, professors need to wake up and see what is about to transpire. Even though the administration said it would only go ahead with the project if it raised funds from private sources, it has now been leaked by the Chronicle of Higher Education that the university will borrow seven million dollars from itself. First of all, it is important to note that this new funding model goes against the requirement of the academic council, and it appears that the faculty only found out about this plan when it was discussed in the national media. Thus, we should read this secret plan for self-borrowing as a sign that the administration intends to go ahead with its online project regardless of what the faculty senate says.

More troubling is that the target classes for the first round of the pilot program will be courses taught at all of the undergraduate campuses. This move is the first step in getting rid of �departmental duplication.� If senate faculty think that the only people who will be hurt here are the lecturers and graduate students who are currently teaching most of the required undergraduate courses, they should think again. Once the UC establishes that it can teach the same Spanish class on all of its campuses, there is no longer a need for a Spanish department on each campus. Moreover, since language courses taught by lecturers and graduate students cost a fraction of the cost of courses taught by senate faculty, language departments will lose their cash cows and their source for cross subsidization. In short, language departments will be bankrupt and a prime target for departmental closure.

It is vital to stress that when classes are taught on a system-wide basis, it becomes unclear who controls the courses and the funding. At a recent conference on higher education, I heard how at a research university, the central administration has simply stepped in to staff and manage system-wide courses. While this may not be the intention of the Office of the President, we must remember that this entire initiative has sidestepped shared governance.

Another possibility is that once departments put their classes online, they will be taxed at a high rate by the system and their own campuses. For instance, at the University of Nebraska, departments once kept 92% of their profits from distance education, but now, they keep less that 40%, and this money fails to cover the cost of staffing the courses. Moreover, once departments start running a deficit, they are prime targets for restructuring and the laying off tenured professors.

If you think this is a delusional conspiracy, you should look at the way language programs throughout the UC and the country are being reduced or eliminated by simply not filling vacant tenure-track lines. By using a rhetoric of crisis, administrators are getting faculty to participate in their own downsizing. The first step was to use money from the Gates foundation to bribe faculty to come up with online courses. Since many faculty have obliged, the university can now say that it has faculty buy-in, and so the project should be extended to all impacted lower-division courses. This is simply a plan for financial suicide and the covert effacement of shared governances.

In fact, I have spoken with several people who are participating in the development of the pilot courses, and they are all good people thinking that they can make a positive contribution, but they all fail to see how their good intentions can be misused by the administration. For some reason the faculty believe they can control the process, while every step of the way, this project has been dictated by the central administration.

We should start a letter writing campaign to President Yudof explaining why we do not think this online project will save the university. By the way, total revenue in the UC has gone up by $3 billion during the last three years of our fiscal crisis.

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Brown Threatens to Double UC Tuition

Governor Brown predicts that if the state does not pass tax extensions in June, tuition for in-state University of California students could go from $12,000 to $20,000 or even $25,000 next year. This claim shows that Brown has bought into President Yudof�s rhetoric, and now both are using the same misguided strategy. As I have argued in the past, Yudof believes that his only way of working with the state is to threaten Sacramento with cutting enrollments or raising tuition. The end result of this strategy is that students always suffer, and the UC does not have to look at its own internal issues.
In contrast to popular belief, the UC brings in extra revenue for each student it enrolls, and therefore, it makes no financial or educational sense to reduce enrollments. In fact, I have recently presented to the Office of the President a new calculation of how much the UC profits from each additional student. While I have not heard back from UCOP yet, my calculations show that the administration has been misrepresenting UC�s financial status to not only the public and the state, but also to the Regents. As you will read below, virtually all of the statistics that UCOP presented at the last Regents meeting regarding student enrollment and finances are way off the mark, and this information has led some Regents to believe that the UC can simply give up on state funding. Moreover, the same faulty information is being used by the Governor to threaten a doubling of student tuition.

How Much Does the State Really Give the UC Per Student
The University of California administration often argues that the state support for UC students has gone down by over 50% in the last twenty years, but looking at the actual enrollment and funding numbers (the sources are listed at the end of this entry), we find that the per student state funding in 1990 was $13,690 (there were 156,000 students and the state gave the UC $2.1 billion). In 2010-11, the per student state funding is $15,000 (200,00 resident students and the state funding is $3 billion). In terms of student fees and tuition, the UC will receive this year $1.9 billion in tuition and fees (after paying out financial aid), and there are 215,000 students (resident and non resident, graduate, undergraduate, and professional); thus the current per student tuition revenue is $8,267. If the state reduces its support to $2.1 billion, which is what the Governor is threatening will happen if tax extensions are not passed, the per student state support will be just over $10,000, and the total revenue per student will be about $19,000. Furthermore, if the UC gets $2.6 billion from the state, the per student support for resident undergraduate and graduate students will be $13,000. In any case, it is incorrect to say that students will be paying more than the state. In fact, currently, the UC is scheduled to receive $21,260 per student in combined state funds and student tuition (this is based on state support of $2.6 billion). If we add in an average of $2,080 per student out of the general fund, this gives a total of $23,340 of revenue per student (the UCOP 2011-12 budget presentation graph puts this number at $17,220). As I told members of the UCOP budget staff, by downplaying these numbers, the administration motivates Regents to claim that we can simply walk away from state funding.

How Much Profit Does UC Make on Each Additional Student?
I have also showed UCOP how the worst thing the UC could do is to decrease its undergraduate enrollments because my analysis shows that UC makes a profit off of undergraduate student it enrolls. According to UC�s own numbers in its accountability report, in 2007-08, there were 3,008 Lecturers (average appointment was 51%) representing 1,550 full-time equivalent positions (fte), and they generated 1,554 student credit hours per lecturer fte at a cost of $34 per student credit hour (the average lecturer FTE salary was $54,000 in 2009-10). (I am using the most recent salary data from 2009-2010 and the most recent student credit hour data, which is from 2007-08. If anything, faculty are teaching more student credit hours now, so my calculations are highly conservative).

If we now look at senate faculty, in 2007-08, there were 10,150 senate faculty FTE averaging 445 student credit hours per fte. Senate fauclty had an average salary of $110,000 and cost $247 per student credit (student credit hours are a superior way of calculating cost because they takes into account class size and course units). Last year, undergraduate students averaged 45 credit hours per year, and since two thirds of the student credit hours are taught by senate faculty, we can calculate that the total direct instructional cost is $7,920; it cost $7,410 for senate faculty to generate 30 student credit hours and $510 for lecturers to produce 15 student credit hours. If we add 20% of salary for benefits, we get $9,504. (This number is high because half of the lecturers do not get benefits, and the senate faculty who teach most of the undergraduate courses do not make as much as the senate faculty teaching mostly graduate courses. Also, UC does not count courses taught by graduate students and instead often credits graduate student taught courses to senate faculty who are the teachers of record, and this inflates the cost since graduate students get so much less money than senate faculty).

Using the conservative instructional cost of $9,504 and the current revenue per student of $23,340 (calculated above), the UC generates $13,836 per student to pay for related and unrelated costs. It is clear that due to the economies of scale, each time you add more students, you do not hire another administrator or pay more for utilities, the library, or maintenance, and so it makes no financial sense to reduce enrollments, especially for lower-division undergraduates who are by far the least costly students. Also, if you reduce enrollments, you do not take down libraries or stop paying your electric bills.

Now, if we want to figure the indirect cost per student, one way to do this would be to determine how much each campus spends on its core mission. For instance, the UCLA College spends 70% of its general funds budget on faculty salaries and benefits (this includes senate faculty, lecturers, and grad students) and 16% on staff and 11% on operational expenditures, so the indirect cost is 27-30%. If we take the conservative indirect cost of 30%, and we add it to my direct instructional cost per student of $9,504, then the total cost is now $12,355. Once again, it makes no financial sense for the UC to reduce enrollment since it brings in an extra $10,985 per undergraduate student. In the case of nonresident students, the UC brings in an extra $23,450 per student. Even if the state decides to reduce UC funding by a billion dollars next year, the UC will still bring in a profit of $8,000 per student.

While I am still working hard to get the state not to cut the UC budget, I also recognize that most of the UC�s financial problems are internal. The quandary is that even though it is irrational for the UC to double tuition if the state doubles its budget cut, I believe this is exactly what will happen because no one is dealing with actual numbers. We all need to confront the truth and push for budget transparency. Moreover, the regents should know this information.

Sources:
You can determine the total state funding for UC by combining these:
http://192.234.213.2/sections/econ_fiscal/Historical_Expenditures_Pivot.xls
http://www.cpec.ca.gov/completereports/2004reports/04-20/21.PDF
http://www.cpec.ca.gov/FiscalData/FundingTable.ASP

Enrollment data:
2000 to 2008 here: http://www.universityofcalifornia.edu/accountability/index.php?in=6.2&source=uw
1964 to 2006 here: http://budget.ucop.edu/enroll/actfte.pdf
2009 projections are here: http://repository.ucop.edu/cgi/viewcontent.cgi?article=1000&context=enrllmt_lrp_reports


The average student credit hours can be found at: https://sisds.ucdavis.edu/aboutinstruction.htm

Average salaries for professors 2011: http://www.universityofcalifornia.edu/regents/regmeet/jan11/joint.pdf
For the average cost of benefits for faculty serving the core missions, see:
�The University of California 2008-09 Budget For Current Operations Summary of he Budget Request.�

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