Wednesday, March 31, 2010

Let’s have an Alternative Commission on the Future of the University

Since many faculty, students, and workers are very unhappy with the recent recommendations coming out of the Gould Commission on the Future of the University, it may be a good idea to hold our own alternative commission in order to stress the key goals of access, affordability and quality for the University of California. This alternative vision would show how we can increase enrollments, decrease fees, and improve the quality of instruction, research, and service. As an opening gesture, I will articulate some of the principles of this public agenda.

1) Provide more opportunity, not less opportunity for Californian students.

Since the university has increased its reliance on relatively inexpensive non-tenured faculty, while the sizes of classes has been expanded, the cost of educating undergraduate students in the UC system has gone down dramatically in the past twenty years. Moreover, the faculty-to-student ratio has gone up, and as I have previously shown, the campuses turn a profit on each student they enroll. We can therefore improve access and affordability by enrolling more students and lowering or freezing student fees.

2) Pursue cost savings by reducing the number of administrators

The Commission is already considering this need to reduce administrative costs, but this may be a slow and difficult process. A simpler strategy would be just to require each administrative unit to reduce its budget by 5-10% each year. After all, many academic programs regularly get this type of budgetary mandate, and so a generalized cut could motivate effective administrative cost savings.

3) Stop exploiting graduate students

Not only do graduate students cost four times more than undergrads to educate, but a recent study of UC doctoral students showed that only half of the students who start PhD programs actually get degrees within a ten year period . Moreover, only half of the students who do earn their doctorates and pursue academic jobs get tenure-track positions, and out of this group, less than third get positions at research universities. This means that most grad students are being trained for jobs that do not exist, and these grad students are really being used as cheap academic labor. Furthermore, one reason why so many grad students cannot get jobs when they graduate is that there are so many grad students teaching undergraduate courses before they get their doctoral degrees. If we fully fund grad students through grants, we can restrict the number of PhD students and limit how much they are forced teach. This strategy would help the academic labor market and allow doctoral students to graduate in a more timely fashion.

4) Increase the number of small, interactive classes
If you want to know what universities consider to be effective teaching, just look at what they say about their Honors Programs. They all stress how students are taught in small, interactive classes by expert faculty members. The UC could improve the quality of undergraduate instruction by having more seminars, but for some reason, the administration believes that it is much cheaper to have large lecture classes; however, I have shown that large lecture classes are often more expensive than small seminars due to the cost of having several small sections taught by graduate students accompanying the large lecture.

5) Allow Research Professors Not to Teach
Already many research professors use external grants to buy themselves out of their teaching duties each year, yet the university clings to the idea that everyone should teach and do research. Instead of forcing ineffective or unmotivated professors into the classroom, professors should have the option of being evaluated and promoted solely based on their research.

6) Provide Job Security for Instructors
The recent move to layoff hundreds of non-tenured lecturers shows that the university needs to provide permanent funding for instructors who have a proven record of excellent teaching. By creating a class of instructional professors, the university’s commitment to undergraduate education can be fortified. In fact, the university could simply agree to transform continue appointment lecturers into Lecturers with Security of Employment.

7) Resist the move to Summer Instruction

Most of the UC campuses use the quarter system, which means that classes only meet for ten weeks, while in most universities using the semester system, classes last at least fifteen weeks. In other words, in the quarter system, students have a third less time to study any particular subject, and faculty are pushed to rush through important subject matter. If more classes are moved to the summer, and these courses only meet for six weeks, it will become even more difficult to teach students in an effective and comprehensive manner. Instead of forcing students to pay extra to take required courses in the summer, the campuses should hold more classes at night and other under-utilized times.

8) Stop the Push for Online Instruction

While it is important to use new technologies in the classroom, most online programs result in higher costs and lower retention rates. If the university wants to be respected for its quality of instruction, it cannot make students take classes online just to save money. The faculty and students should resist this move and demand more effective instruction not less.

9) Make Sure Research Pays for itself

The Commission recognizes that many external research grants lose money and that the university should bargain for higher indirect cost rates. This recognition is an important step in making sure that research funded by external grants do not lose money. Another step would be to undertake a comprehensive study of how much research at the university actually costs and who subsidizes costly research programs.

10) Stop Using External Money Managers to handle UC’s Investments

Until 2000, the UC handled its own investments out of the treasurer’s office, and this not only saved money, but it helped to produce much stronger investment returns. Outside money managers charge huge fees, and they often bet against each other, while they undermine the ability of the university to maintain a diverse portfolio. Instead of threatening to constantly increase employee and employer pension contributions, the system should first look at its own internal investment practices. There also needs to be a strong effort to place faculty and workers on the pension board to make sure that the regents do not push the university to invest in the private interests of the individual regents.

11) Push the State to Support the University at a Higher Level

While the commission realizes the need to get more funding from the state, they fail to support any specific policies to make this happen. It is clear that some type of revenue has to be raised, and it is necessary to repeal the requirement that all taxes and budgets have to be passed by two-thirds of the state legislature. The university should also support AB 656 to tax oil extraction and use the funds for higher education.

Please post your comments, so we can begin discussing our vision of the future of the university.

Monday, March 22, 2010

The Future of the University: Funding Options for a Permanent Crisis

The Commission on the Future of the University’s Funding Strategies working group of has put together a document listing their initial proposals, and near the start of their report, we find the following ominous claim: “The funding gap is exacerbated by a significant unfunded post-retirement benefit liability, which is currently $1.9 billion and expected to reach $18 billion by 2013. Similarly, the University’s unfunded post-retirement healthcare liability is projected to grow from $13 billion today to $18 billion by 2013 . . . Because the PEB Task Force is scheduled to finalize recommendations by this summer, we do not address PEB issues in this report, but recognize that more than any financial challenge facing the University, the cost of providing these benefits has the potential to overwhelm our ability to continue our tripartite mission of teaching, research, and public service.” While these statistics are presented as neutral facts, they are in reality very complicated assumptions that require a deeper analysis. On face value, it looks like the UC faces an enormous fiscal crisis that will not go away, and so the future of the university entails a permanent budget crisis. However, we must understand that the pension and retiree healthcare liabilities are mostly accounting mechanisms that were developed under the George W. Bush administration as an attempt to undermine unions and pension plans.

According to new accounting requirements, institutions have to declare on their books all of the future payments that they will have to make to their retirees. In other words, in 2010, we have to calculate what would happen if everyone in the UC system retired today, yet, we do not have to actually put money into an account to fund this huge liability; rather, we have to make sure that in our audited financial statements, we declare the huge liability and subtract it from our total revenue.

In the case of the UC system, this accounting requirement has allowed the system to move billions of dollars from the unrestricted to the restricted category; in other words, UC has a way of declaring that it has no money to spend on things like instruction or employee salaries because it has shifted money from a usable pile to a non-usable pile. But, and this is a huge but, the UC has actually moved very little money; what they have done is just changed where the money is listed in their financial statements. For some strange reason, no one in the financial working group knows about this accounting move, or at least no one is admitting that they know it, and instead, they are using the post-retirement liability to call for a change in retirement benefits, while they declare a permanent fiscal crisis for the UC system.

I am not arguing that the UC should not fund the pension plan or the healthcare of retirees; what I am arguing is that the university should not use a new accounting requirement to manipulate the budget. After all, the UC has for the last two years declared a several billion dollar liability, while they have only shifted a couple of hundred million in to the retiree accounts. Moreover, this working group does not comment on any of the UC's questionable investment strategies that have resulted in billions of dollars of losses.

Another set of assumptions that this working group has accepted concerns the level of state funding and the amount of money the UC needs from the state: “The University of California Office of the President currently estimates that UC’s core funding from state funds, student fees, and other sources has fallen $1.2 billion below UC’s current needs. At current levels of state support, this funding gap is estimated to grow to $3.5 billion by the 2015-16 fiscal year. . . ” What this statement of fiscal decline does not show is how the UC has calculated what they need from the state or what they will get from the state in the future. While it is important to push for more state funding, it is difficult to ask the legislature to back the UC’s funding requests when the university is always using questionable numbers and trumped up statistics. For instance, the following statement is simply false: “State funding per student has declined by 54% since 1990-91.” As I have pointed out on several occasions, state funding per student has gone up since 1990; what the UC should say is that state funding has not kept up with inflation, but they would have to define the inflation rate and why the costs of a UC education have gone up; unfortunately, they never do this, and so they upset the legislatures who have fought for increased UC funding in the past.

Even with these major accounting issues, the report does make a few important recommendations that should be followed. One vital suggestion is to reduce the cost of administration related to the core mission: “Costs not directly related to research and teaching (herein called administrative costs) are estimated to be as large as 25-30% of that which is funded by UC core funds. While recent actions have been made to reduce these costs, they remain substantial.” The working group points to several recent efforts to decrease the cost of staff and administration to accomplish the goal of saving money: “When the University of Texas System enacted a shared-services model to improve administrative efficiencies, $250 million in value was added to system operations. The “Carolina Counts” program at UNC, focused on operational efficiencies, expects to deliver $90 - $160 million dollars of ongoing operational savings within five years. Most recently, UC Berkeley expects to generate tens of millions of dollars in annual savings as a result of administrative improvements suggested by external consultants Bain & Co. There is no reason to expect that similar results, scaled to the UC system, could not be delivered as well through the pursuit of an administrative efficiency framework.” We should applaud this effort to lower the administrative costs of the university.

Another very positive recommendation concerns the questions of research grants losing money: “For a variety of historical reasons and local campus practices, indirect costs charged to non-federally funded research projects – those funded by the State of California, foundations, gifts, and corporations – do not fully recover the costs of research conducted for these agencies. Hence, the university subsidizes this research with core funds. This can be rationalized in times of ample budget in fulfilling one of our primary missions – research. It cannot be rationalized in times of insufficient core budget to fulfill one of our other primary missions – teaching.” Here we find a clear recognition that funds that are supposed to be dedicated to instruction are being used to subsidize grants that do not come with enough indirect funding: “Preliminary estimates are that current policies and practices of recovering indirect costs on non- federally funded research throughout the University of California are currently leading to the use of core-funds to subsidize this research in the range of more than $300 million per year.” In order to rectify this situation, the working group suggests that “Preliminary estimates are that we are 5-10 percentage points behind our comparator institutions in ICR rates, and recover 75% of facilities and administrative costs attributable to federally- funded research. Increasing ICR rates by just 5% across UC could generate more than $150 million per year.” By increasing our indirect cost recovery for federal and state funds, the UC could turn a research deficit into a research surplus.

Another set of recommendations concerns student fees, and the movement here is towards privatization. Not only do they want to replace the term “student fees” with “tuition, but they call for a continual increase in the sticker price: “Notwithstanding recent major increases in student fees, the University of California remains a significant value within the marketplace of leading universities. At least in the short run, there is significant room to increase tuition levels without significant negative impacts on projected enrollment or access for students from low-income families.” From a purely free market perspective, the UC could get away with major increases in student fees; however, this proposal does not look at the effect on middle-class students and first-generation students who do not understand how financial aid works. This recommendation also fails to realize that a pre-planned, multi-year set of tuition increases will only make it easier for the state to cut its funding for the UC system.

The final recommendation is perhaps the most dangerous and likely the most attractive to some faculty and administrators. This suggestion is to allow professors to be partially compensated through non-state funds: “There are already examples in the UC system of faculty salaries being covered in part by fees (professional schools), or by a combination of income from clinical practice and research (medical school). There have been a number of suggestions of ways to extend similar or derivative practices to other faculty: Compensation plans similar to the medical schools for faculty in the biological sciences; the use of non-core funding (e.g., contract and grant money, or other external sources of revenue) to pay some portion of the off-scale component of faculty salaries, where feasible; More extensive use of contract and grant funds to support some fraction of faculty salary during their regular nine-month appointment.” At first glance, these look like great ideas, but they would function to undermine the humanities and the social sciences that do not receive large sums of money from external grants, patents, or services. This type of compensation system would also turn public employees into privatized entrepreneurs.

It is surprising that none of these commission members even considered increasing enrollments and holding fees at the present level. It is also alarming that this financial committee did not address the university’s questionable investment practices and secret compensation deals. By repeating the university’s standard budget propaganda, the commission reveals that its main function is to support the administration’s desire to privatize the world’s greatest public university system.

Monday, March 15, 2010

Fact-Checking the UC’s Financial Myths

UC faculty and students are still being manipulated by the administration to blame all of the university’s problems on state funding, but as I have previously shown, most of the UC’s budget issues are internal. While I have argued that we still need to fight to increase the state allocation for higher education, we have to pressure UC administrators to provide truthful information regarding the university’s finances. Moreover, the solution to our current inability to provide access, affordability, and quality higher education in the California is to increase enrollments and make sure that the enhanced revenue finds its way into the classroom. While many people will argue that we cannot afford to have more students, I will show below why we cannot afford not to have increased enrollments. To make this argument, I will refute several of the standard myths that the UC circulates about its own finances.

Myth 1. UC does not get enough money from the state and student fees to cover the total cost of instruction.

Fact #1: I have calculated that while the University of California receives $15,000 from the state for each student, and student fees and tuition brings in another $10,000 per student, it only costs about $3,000 to educate each student. This means that most of the money that students and the state pay goes to fund external research, administration, and extracurricular activities. Furthermore, the main reason why the cost for instruction is so low is that research universities rely on large classes and inexpensive non-tenured faculty and graduate students to teach most of their undergraduate courses.

To determine the basic educational cost at any university, you simply need to take the average salary of the people who teach the courses and then divide that salary by the average number of courses to get the per course cost. In the case of the University of California, the average salary for a professor teaching undergraduate courses is $100,000, and the average course load is 5, which means the per course cost is $20,000. However, half of the undergraduate courses in the UC system are taught by non-tenurable lecturers and grad students, and their average per course cost is $6,000. If we average these two costs together, the combined average cost per class is $13,000. The next thing to do is to determine the average class size, and the best way to do this is to look at the size of the classes that the average student takes in an average year. In the UC campuses using the quarter system, students average 8 large classes and 2 small classes per year, and the large classes average 200 students, and the small classes average 20 students. This means that the average per student cost for a large class is $65, and the average per student cost for a small class is $650. Now, we can add up the cost of the ten courses a student takes in a year, and we get $1,820 ($1,300 for 2 small classes + $520 for 8 large classes).

One thing that I have left out of this calculation is the cost for small sections taught by graduate students that often accompany large lecture classes. In the UC system, this additional cost adds another $1,000 to each undergraduate’s yearly bill, and if we now multiply the whole total by the cost of providing healthcare for all of the instructors (15%), our new total is $3,243. We are still a long way from the $25,000 that the UC claims it costs to educate each undergraduate student per year. More importantly, it is clear that if the UC increased enrollments, it would have more money for all of its other activities.

Myth 2: The state now only pays half as much per student as compared to 1990.

Fact #2: If you actually crunch the numbers, as I have done, the UC got $13,000 per student in 1990, and in 2008-09, they got over $15,000. UC argues that if you use a special inflation index, a calculation that they have never revealed, you see that in terms of “real dollars,” state support has been cut in half; however, the truth is that state support has gone up, and the UC cannot account for how state funds are spent. Moreover, the UC does not tell students or parents that the UC Office of the President redistributes state funds and student fees to the campuses according to some secret formula. By claiming that the state has cut its funding in half, the UC is able to blame the state for all of the university’s problems, and then after attacking the state, the administration expects lawmakers to turn around and increase their funding for the UC system.

Myth #3: The UC had its budget cut by $800 million during the 2008-09 fiscal year.

Fact #3: According to its own audited financial statements, the UC’s funding from the state went up $300 million in 2008-09. It turns out that when President Yudof and other UC officials sought to justify the raising of student fees and the furloughing of employees, they constantly hid the fact that the state’s funding reductions for 2008-09 were erased by the federal recovery money and additional state funding. While, it is true that for 2009-10, state funding was actually cut, the problem is that we do not know by how much and if any federal recovery money has been used to reduce the total loss of state funding.

Myth #4: Most of the UC’s funding is restricted, so you cannot use money from a grant to study laser technology to pay the salary of an English professor.

Fact #4: According to its own audited statements, only about a third of UC’s budget of over $20 billion is restricted by law. The UC likes to pretend that it cannot move money around, but that is what it always does. For instance, when a professor gets a grant to study laser technology, he uses part of the grant to buy himself out of his teaching duties. His department then takes this buyout money from the external grant to hire a grad student or lecturer to teach the professor’s course. The strict line between the restricted external grant funds and the state-supported unrestricted instructional funds has now been broken.

Another proof that restricted and unrestricted funds are combined is by the fact that many administrators have their salaries paid out of a combination of state funds, student fees, endowment funds, and external grant indirect costs. Moreover, even when an outside donor gives money to the university to support an endowed chair in History, this means that the university does not have to use its own unrestricted funds to pay for the position. In short, the strict border between restricted and unrestricted funds is constantly being crossed in the UC system.

Myth #5: UC has a budget crisis.

Fact #5: In 2008-09, the UC had a record year of revenue, and it looks like revenue in 2009-10 will be even higher. In almost every category of the UC budget, we see that the UC has been able to bring in more money as it raises student fees and furloughs and layoffs employees. Last year, due to the federal stimulus, the university received a large increase of research money, and the one-year augmentation of student fees by over 23% helped the system to recoup any losses caused by the 2009-10 state reductions. Also, while the UC claims that it will bring in an additional $195 million from the furloughs, it is possible that the salary reductions saved at least twice that amount.

Myth #6: UC has to spend more money on administrators.

Fact #6: While the UC has tried to justify its constant expansion of the administration, we have shown that not only are these increases unneeded, but they take away funding and power from the faculty. Twenty years ago, there were more faculty than staff, and now the faculty only represent a quarter of all employees. Moreover, administrators and bureaucrats have some of the highest salaries in the system.

It is time for the faculty and the students in the UC system to stop buying the administration’s line and to force the university to respect shared governance by providing accurate and transparent budget information.

Tuesday, March 9, 2010

Unconscious Racism at the University of California

Currently, the University of California appears to be facing several unrelated problems that bring into focus the central issue facing all public universities: how can schools maintain access, affordability, and quality during a time of decreased public support. For many people inside and outside of higher education, the solution to this problem is to push states to increase their funding for higher education; however, this necessary correction is only part of the problem: universities need to not only campaign for more money, but they also have to show that they are using their funds in an effective and efficient manner. Moreover, public universities need to actively fight ethnic and racial conflicts that threaten to arise during times of economic downsizing.

While at first glance the question of racism seems to be unrelated to the issue of funding, it is evident from recent events at the University of California that increased racial tensions often occur during an economic downturn. In fact, one obvious connection between racism and economics concerns enrollment policies and decisions. As many people have reported, less than 2% of the undergraduates at several of the UC campuses are African American, and although this low level of enrollment might not be blamed directly on racism, the effects of this situation is to fan racial tensions. Not only do some African-American students feel that they are not welcomed on their campuses, but studies show that when an ethnic or racial group only represents a small minority, the people from the dominant group revert to unconscious prejudices to categorize and stigmatize the minority group.

In his book, The Hidden Brain, Shankar Vedantam reviews the latest studies of how racism works, and he documents some surprising findings. One of the more upsetting discoveries is that children as young as three-years-old will associate positive traits with white people and negative traits with black people regardless of the race of the child or the attitudes of the children's parents and teachers. As Vedantam stresses, these associations are learned through cultural experience and continue to exist in the unconscious of people even if these same individuals espouse tolerant and progressive stances on a conscious level. From this perspective, the only way to fight racism is to openly admit that we all harbor racist associations and that we need to become aware of our unconscious tendencies.

Another interesting finding that Vedantam analyzes is the notion that people equate blackness to crime and welfare on an unconscious level. In reviewing several psychological tests that are based on word and picture associations, we are confronted with the fact that even if politicians do not mention race when discussing crime and welfare, people draw associations between deviance and blackness in their hidden minds, and these associations often determine how people vote.

To read more, click here.

Friday, March 5, 2010

March 4th UCLA Recap

On March 4th, a UCLA coalition of students, workers, and faculty held two rallies, a teach-in, and a sit-in. All of these events were very energetic, and we made sure that our demands were heard by the public and the administration. In fact, early pres reports showed that the media were making the connection between the state reduction of funding and the fact that students are now paying more for less.

At the noontime rally, attended by close to a thousand people, groups from all sectors of the UCLA community came together to speak as one voice. After a series of passionate speeches and chants, the entire crowd marched across the campus, and a couple hundred of students, workers, and faculty started an occupation of the central administration building. Many people stayed in the hot hallway in front of the Chancellor’s office for over six hours, and the time was filled with speeches, music, and an open debate concerning what to do next. While the coalition demanded to speak to the Chancellor, a group of police were protecting his office, and he was not seen during the entire day. During part of the sit-in, CNN did a live broadcast that can bee seen here.

At 3:00 p.m., a teach-in with over two hundred students and faculty was held outside Powell library. After a series of passionate speeches and presentations by faculty and graduate students, the crowd marched over to Murphy Hall and joined the coalition outside of the Chancellor’s office. While the plan was to lead a march into Westwood, the coalition decided to stay inside and outside of Murphy Hall.

At 4:30, a second rally was held at Bruin Plaza with the general theme of “Protect Public Education, Protect Public Workers.” Teachers and students from local K-12 schools, community colleges, and California State Universities joined together to protest and to hear a great series of speakers. After this rally, many people marched back to Murphy Hall where we found that the building entrances were now being blocked by police. Since we could not enter the building, we held another rally outside of Murphy Hall. During most of these events, KPFK radio was broadcasting live from UCLA, and you can hear three great hours of coverage and interviews by clicking here and here. For a discussion of where we go next, click here.

Monday, March 1, 2010

March 4th: The UC Movement Against Privatization

When students and workers say they are fighting the privatization of the university, they are resisting six inter-related trends: 1) the shifting of costs from the public to the individual; thus while the state reduces funding, the individual students are being asked to make up for the differences through higher fees; 2) the university is being run more like a private profit-centered business than a not-for-profit public institution; in this structure, costs are socialized, while profits are privatized through the rise of an administrative class; 3) the move from a peer review system for public workers to a private model of free agent contract negotiations; 4) The move to individualized, online learning; 5) The student focus on earning individual grades over social learning and collaboration; and 6) the move to have private donors and private corporations fund the research mission.

On March 4th, throughout the state, these privatizing tendencies will be confronted by the push to defend public education and public workers. For a list of rallies and protests, click here. Also, to read my Huffington Post article on the UC coalition demands, go here. Please come out and support our actions to protect high quality public education in the state of California.