New Haven People's Center on April 18, 2026  

I gave this talk at the 45^th Anniversary Conference of the Whitney Humanities Center, Yale University,  April 17, 2026. Many thanks to the organizers, speakers, audience, and my co-panelists.

I’m going to talk about humanities ambition in a time of diminished authority for its fields,  and I’ll say we need big increases in our ambition in response.  But I have to note that the humanities won’t get enough help from their universities, and in many cases will have to fight them.  The Trump administration’s systematic efforts to erase people of color from the American past and present has been translated on campuses as quiet acceptance, via, in particular, the deletion of DEI programs and the merging or closure of departments associated with ethnicity, sexuality, or countries and cultures MAGA America dislikes.

Last year, UCLA eliminated small courses in 2 East African languages, saying they had no funding for them.  The instructor, who had created them, offered to teach out the remaining students voluntarily or for $1; UCLA refused.  Something similar is happening with cuts to medical research that focuses on racial disparities in treatments and outcomes; successful lawsuits have come from groups of faculty and not from their universities. The same goes for student affairs: two weeks ago, the University of Missouri “stripped the Legion of Black Collegians—its historic Black student governing body—as well as at least four other minority affinity groups of all annual designated funding,” claiming orders from the Dept of Justice. “The organizations argued the memo was merely advisory: no matter.” The academic freedom scholar John K. Wilson has described the pattern well. Referring to the antisemitism settlements, he wrote, “It is common to describe these agreements as a surrender to the Trump regime, but it’s actually much worse. This isn’t capitulation; it’s collaboration. This is complicity, not compulsion.” So someone like me, preaching radical humanities revival, needs to remember that we have to build our allies from the ground up, and one at a time.

My main feeling about humanities scholarship is that our disciplines have produced really good research that actually matters to people’s everyday lives.  Regular people need more cognitive power than ever, and interpretative methods applied to complex information have kept the national knowledge crisis from being even worse than it is.  Everybody thinks about the struggles of personal identity, their own and others, and criticism, queer studies, comp lit, ethnic studies, feminist studies, history, philosophy, etc. have generated abundant, useable knowledge about them.  The national democracy, such as it was, has gone down the tubes, while the humanities analyze the affects and the interpersonal relations that help explain why, and what to do. Most people are upset about the absurd concentration of wealth that spreads deprivation in a rich society; literature and criticism has exceled since the start of industrialization at showing how consciousness exceeds economic motives and builds non-capitalist perspectives.  There’s widespread opposition to forever wars in both major political parties, and the humanities generate deep knowledge about the psychic life of aggression and about how to steer it away from violence, even as we can all see that this is all too rare.

So, a pride moment.  Do I think the world would be better if it were run according to the findings of the scholarship of my copanelists and of the people gathered in this room, and of our colleagues in these fields? I do think that! Of course, humanities scholars also do bad work, can and do produce crappy racist and variously phobic stuff, and we are dubious enough human beings to use the university to torment each other in our working lives. But I urge us never to minimize the amazing research, the portraits of adversity, of self-development, of subaltern knowledges made central, of new cultural pathways, of survival in the Gaza rubble, of human powers: collectively our work addresses anyone interested in a hidden present and a transformed future.  New knowledge is the humanities first job, and we have been doing it. 

We’re also good at inserting a “however” right about now, and here comes mine. Faculty members actually have three jobs to do, via a longstanding settlement between the university and society; however, the humanities disciplines have in general really only been doing one of them.

We’ve done this first job of self-reflexive knowledge creation. The second job is substantial control of—real influence over-- the material and institutional conditions of knowledge creation-- university governance, finance, and ongoing processes of reconstruction. This job of institutional-fiscal engagement is not going so well.  Decades of an expanding non-tenure track faculty is one symptom of this failure of faculty control. Shrinking or pausing doctoral programs is another. 

Very bad research funding for the humanities is a third—the humanities rule of thumb is to get 1% of total extramural research funding, and in many contexts much less. Federal data for FY2024 show that Yale spent $433 million of its own “institutional” funds supporting research across all fields (on top of what the sponsors paid). $119,000 of that went to humanities fields for research, which thus received one-third of 1% of the University’s internal research funds.

FIGURE 1

 

The inability of humanities faculty to shape their public image is a fourth symptom of our struggles with the institutional job.   Widespread administrative and board misunderstandings of teaching and research on common humanities topics is a fifth.  

Of course, no one faculty member can reverse any of this, but the issue is that there’s no organized humanities movement to change these conditions coming from groups of departmental chairs or humanities deans, or from professional organizations like the American Historical Association or the Modern Languages Association.  Meanwhile, we compete with –and would sometimes like to work with—disciplines from economics to medicine that do work tirelessly to maintain their working conditions. To be a bit dumb about it, I’d give the humanities an A for the first job and a gentleman’s D for the second.  

The third job, as for any academic discipline, is the construction of fields like history or criticism or philosophy as disciplines that address public needs for knowledge. This job is activism, yet it’s mainly intellectual activism. Often these knowledge needs are tacit or implicit. An example is the public need to be able to interpret how war affects one’s own life in America beyond raising the price of gas. Another public need for knowledge is how to read everything, from a ballot proposition to a novel about post-colonial Zanzibar without cognitive offloading to an AI tool.  Reading and writing are more important than ever in an incoherent and duplicitous world of discourse that is falsely streamlined by chatbot services; we need brain-only reading and brain-only writing now more than ever. 

Most of us would much rather be writing about early modern poetry than politely pressuring administrators to send the missing budget documents. I know I would. So Job 1, our research, generally feels better than Job 2, institutional-fiscal engagement.  And Job 3 has often been banalized as public engagement, so that seems like pure duty too. 

But for knowledge that comes from universities, the authority and resources flow from the last to the first, 3-2-1 on this job list.  Perceived social value controls a field’s funding and status, through complex pathways, and that includes tenure-track jobs, which in turn control’s a field’s scale and effects.  Producing great scholarship isn’t enough, and we have 50 years of experience with this.  To survive, and especially to change the knowledge order, we need to do all three jobs.

The main alternative to doing these three things is to accept an itinerant humanities, where most of the work is done outside institutions mostly by freelancers.  This is where things are currently headed, and excellent work is being done in podcasting, digital journals, substacks, you name it. But nearly all deep scholarship, like most basic scientific research, needs the university system.   And if the fields are to stay in universities, then their members need much more control over universities, and that means humanities faculty, staff, and students doing all three jobs at once, though not as individuals but through organizations.  That will involve, to repeat, Job 3, openly addressing big public problems, where our knowledge is in fact powerful and important, which supports Job 2, rebuilding our working conditions (rebuilding the tenure track job pipeline and undergraduate majoring); which in turn underwrites the first job we already do so well, which is scholarship and teaching.  The public and institutional practices will not dilute or overextend our research, but allow it to carry on, and expand their power and connection to other knowledges.  No individual has to do all three jobs, but collectively they must all be done.

∞∞∞

About this third job: I have time to give just one example of a gigantic public issue where criticism can produce original knowledge to help move the issue into a new state. We face the “grand challenge” of getting to a different kind of economy, one much better than today’s plutocratic, unjust and eco-cidal capitalism. 

The topic of ending capitalism naturally triggers the critic’s modesty impulse. What do critics really know about asset valuation, private equity, tax policy, volatility trading, and the other often mathematicised systems that run the world? How are we supposed to help with the design of, say, government guidance funds for green industrial policy or democratically-elected investment boards that would operate a new kind of “multi-criteria economy,” as Aaron Benanav has outlined it?

Well, any big problem has to be broken down into smaller, solvable parts. One part of the current failure to mitigate climate change is that the big investment decisions are mainly in the hands of private investment firms that invest to maximize returns on their own funds rather than to maximize climate effects.  Orthodox economists call this “market failure.” Why is planetary health or survival in the hands of a financial industry organized as a sultanistic oligarchy?  In part, because our society consents to it, which is a fact about our culture. In one sentence: we consent, often unintentionally, to insulating economic logics from society and culture, allowing a small group of people to run it as a falsely homogenous decision space.  A main climate goal is getting public control over the allocation of climate capital, and that will require a change in culture as much as in economic practice.

Let’s speculate a bit. Say there’s a large consortium devoted to putting climate investment in public hands: they need institutions to do this, and democratic structures, and a public that is ready and willing to participate. This consortium has plenty of engineers and climate scientists and of course economists. They have good ideas about which technologies need how much money and how to make and distribute them.

But they also know that many good technical ideas are missing, and that’s because many communities and kinds of people are missing. They realize that top-down imposition of tech solutions is not only unethical but also dysfunctional: green post-finance will involve the democratically-voted allocation of climate capital. They know that once you make economic decisions along multiple criteria you need to use different kinds of complex consciousness.  And that complexity will require new cultural capabilities coming to the fore.

How does an economy run when it has multiple criteria for success—not only good returns on capital but also deep environmental sustainability, decent economic equality, a politics of mutual respect, tremendous artistic creativity, basically having a much better time than societies are having right now? Our consortium knows that John Maynard Keynes thought about multiple criteria for economic practice—and he was a classic case of literature and economics overlapping. They may know Otto Neurath’s “socialist utility calculation” model from Austria in the 1920s that analyzed how society could address a whole range of valid goals at once—cultural goals as much as economic.  The group realizes that there will be no socialist or democratic economic planning of climate transition without a culture of economic planning, something like a culture of planning consciousness. They know climate policy always fails when it is not connected to everyday consciousness and people’s experience. Suddenly the engineers and economists say, call the humanities people!  They summon everybody in this room.

What do the critics bring to the meeting about green democratic economic planning?   We of course first stare despondently into the epistemic abyss, and then we gather our resources. 

A first big resource is that literature and criticism know that subjectivity or consciousness far exceeds the economic self. This may seem absurdly obvious to us, but Anglo-American policy has operated for hundreds of years on the different model of homo economicus which marginalizes nearly all of psychic life from economic calculation. That’s an economic mistake critics would help to correct, building on literature’s refusal of the economic capture of subjectivity since the Romantics of the late 18^th century. 

A second resource is that literature and criticism endlessly chronicle the quest for capability to achieve all of one’s aims in the face of overpowering economic forces. One traditional name for the process of creating a set of capabilities is Bildung.  The traditional name for its plot is the Bildungsroman, which narrates the gradual gaining of some power over economic logics that are, in literature, wholly entangled with race, gender, sexuality, and other modalities of subjectivity.

A third resource is the critic’s knowledge that transformation regularly comes from the excluded and the ignored—from the orphan, the domestic, the slave.  A fourth is the plot: how one tells the stories of climate funding and climate action so that people are fully involved.  A fifth is a capacity for what psychologists awkwardly call mentalization—we now know literary reading does a better job than non-fiction reading for seeing others as having different minds, that one can learn nonetheless to understand. A sixth is that the humanities fields do not model societies, even small communities or families, as homogenous latent spaces to which rules can be applied uniformly.  Being in the world, via humanities fields, means capacity with navigating multiple, different, conflicting, yet interacting systems whose assumptions change and contradict each other as we hurtle from one to the next.  These seem like humble resources to us, and yet their full presence would help integrate climate finance into climate consciousness, bringing the public into climate capital allocation and thus creating a culture of real sustainability.

I realize this feels very over the horizon. But this feeling, in my view, reflects the fact that our profession doesn’t regularly link our knowledge to the social horizon.  And yet, essential public change comes from the culture; the humanities fields are those that are closest to understanding how culture works. As societies try to replace an economics that is currently failing at green transition (and other things) within a highly diverse and emotionally fragile culture like our own, humanities knowledge of subjectivity will be a massive help. Only a fraction of humanities scholars would undertake a project like this.  But its visible effects on public crises would stabilize humanities disciplines overall, link them to other disciplines, expand their ambitions, and make human inputs into complex systems better than they are right now.

We can think of this as the humanities helping to build a new culture. Nearly forty years ago, the Jamaican-British cultural critic Stuart Hall correctly diagnosed Thatcherism as a civilizational movement. Hall saw it as a campaign to redefine Britain’s entire way of life by creating a new sensibility, a new definition of British identity. For Hall, this meant that Thatcherism wasn’t only about cutting taxes and empowering private corporations, but also about building a new British culture. Thatcher’s movement (like Reagan’s, like Trump’s) did this not by segregating economics and culture, but by bringing them together. Hall insisted that the political left needed to do the same thing, not simply in reaction but by advancing its own common purposes. Hall called on the left to build “a new cultural order.” The left’s choice, he wrote in 1988, is “between becoming historically irrelevant or beginning to sketch out an entirely new form of civilization.”    The humanities fields have been creating the pieces for this in our research, and the next step is to help build the new civilization that will, among other primal things, allow the massive acceleration of the climate transition that orthodox science and social science have not and will not achieve on their own.

The humanities are dead. Long live the humanities.

 

 

NOTES

Stonehenge on December 21, 2025   

In the end, the university’s main value is its intellectuality, the treatment of everything that is with thinking and all its methods. 

 

That was the first line of the post I started drafting on Monday, on the holiday Easter Monday here in Britain. But I was struggling to concentrate.  I thought maybe I needed a rest day: I’d spent a couple of days last week writing a section on AI and the future of jobs for a collaborative report that we’re doing on the crisis of learning worsened by AI, and after devoting another chunk of time to it over the weekend it wound up at 6000 words. It’s not the length, it’s the sense of fighting inevitability from which I’d need a rest.

 

So, I took the stupid kind rest I take while writing, which is to check the internet where life always carries on when mine is stuck.  I went to my Remaking the University Facebook group, where I always learn something from the members.

 

Sure enough, someone had posted something I hadn’t seen—news that the director of the Middle East Center at the University of Washington, Seattle, associate professor Aria Fani, had been fired overnight from that director position for two discussions of the war on Iran to the Center listserve.

 

Fani “wrote the war isn’t against the Islamic Republic but against the state of Iran and its people, cultural heritage, ecology and civilian infrastructure, and said Israel was committing acts of terrorism. He wrote that he saw Zionism as ‘cancerous, a potentially fatal outgrowth in our planetary body.’” 

 

The head of the Jackson School of International Studies, Daniel Hoffman, first blocked his posting to the list and then took him out of his job as center director.  “According to Fani, Hoffman told him he was unfit for leadership because his emails had made some members of the Middle East Center community feel attacked for their views. Hoffman directed a request for comment to the UW media relations office.”

 

The story ends with this: “I feel profoundly hurt and betrayed,” Fani said. “There’s a chilling effect on, not just my academic freedom, but that of my colleagues, anyone who dares to speak out against the war and against aggression.”  Uh huh, I thought, very definitely. And it feels like that’s exactly what UW Jackson School director Hoffman wants—the chilling of academic speech.

 

But what gnawed at me was the interest from one or maybe two faculty members in the FB group in firing Fani. This was a small sample of comments, but nobody laid out his academic freedom protections as preventing summary removal without a hearing.  And nobody seemed to care about Fani feeling “profoundly hurt and betrayed.” 

 

I imagine Fani feels betrayed not just by summary removal, though that does violate his academic freedom, but by the indifference of his boss and co-workers to his feelings.  I got too annoyed to let myself comment so I went back to this post. I was writing about the attacks on intellectuality anyway.

 

U.S. universities, I wrote, are now subject to a largely unimpeded crusade against academic freedom that is damaging intellectuality wherever it arrives. It promises to make the U.S. more fundamentalist, more reactionary in the literal and figurative senses, and much less capable. It attacks mass intellectuality as something the wider population should have. Ideological tests are being imposed as prior restraint on teaching and research. In Indiana, the state requires new academic programs to ask “How does the proposed program cultivate civic responsibility and commitment to the core values of American society?” (see Indiana University professor Deborah Cohn’s “Letter to Indiana Commission for Higher Education.”)

 

The UW case is an example of a variant of external regulation of academic content, which is the post-facto attack from within.  Culture wars run by administrative proxy are now often in the hands of the states. The 2020s are the most state-repressive period toward since the 1950s. Everyone is now familiar with the many cases, like Indiana noted above, where codes create prior restraint on teaching and research or post-facto punishment for having offended someone with one’s teaching or research.  Both create massive chilling effects, which is their intention.  And they don’t have to be legal to chill (see John K. Wilson’s discussion of one Indiana case).

 

I wrote that on Monday and then my mind wandered to how much worse it is elsewhere. Israel committed systematic scholasticide in Gaza—every university there was annihilated.  I thought about my review of Maya Wind’s book on Israeli universities—now up at the Journal of Palestine Studies—where one of the unpleasant surprises for me was that “only one university president has met with a Palestinian university counterpart, and that happened in 1979.”  This led me to Iranian universities the U.S. and Israel have been bombing, including Sharif University of Technology. I found out by reading this tweet from Arnaud Bertrand.

 

 

Yes, exactly. And it’s to the shame of their senior managers that Israeli universities made no official objections to the destruction of their Gazan counterparts, and that U.S. universities aren’t objecting now to the destruction of their Iranian counterparts.

 

The second heavy pressure on intellectuality is permanent budgetary austerity.  We’ve talked about that quite a bit here so I'll say no more today, but--just a reminder! The sad mediocrity of most state allocation deals creates permanent national constraints on teaching and research. Many research projects never get off the ground for lack of funding: Liner Notes 50, 48, 45, 44, and 43 are some recent posts that discuss the financial squeezing of academic thought.

 

OK well at least no one’s dropping Made in the USA bombs on us.  Yet.  The feeling I can’t shake is helplessness. Helplessness about the toxic wrongness of nearly all public positions on education, of the 21^st century’s forever wars, of constant attempts to make teachers and professors come to heel, and the terrible reasons people are given for learning anything.

 

The third destructive pressure on intellectuality is the job imperative. The idea here is that educational value of a major is its wage value, and majors that don’t hit an average wage target should be cut. Trump’s one big ugly bill included a mandate called “Gainful Employment for All”  that pulls federal loans from programs whose graduates don’t have average wages above those for high school graduates in the state.  In March, Indiana’s governor signed a law that the majors of lower-earning graduates will by state law have to close.   

 

Among many problems with this plan, the theory is completely wrong. A subject’s material in fact has nothing to do with the wages that result from studying it.  The claim that learning=earning was invented by economists in what came to be known as Human Capital Theory (HCT) in the 1950s and 1960s.  They didn't ever show a causal link between cognitive development and one's labor market salary. Economiss offered correlations and proxies galore, but these didn’t settle the question of where the private pecuniary gains really came from. 

A while back, the economist Aashish Mehta and I reviewed a particularly useful critique of HCT, which showed that the theory works mainly for the top 10% of wage earners and never actually justified making universities responsible for graduate wages.  Universities, however, have foolishly made a cottage industry of creating wages-by-major dashboards and marketing in the hope the wage promise still works for recruitment.

 

The apparent effect of HCT before 1975—namely, generally rising wages for ordinary workers--was not actually higher levels of educational capital being fed into the labor markets.  The broad effects of HCT came from three things.  First was the country’s modest post-war social democracy, which included health insurance, pensions, free college, and other benefits that helped support general wage growth. Second were the civil rights movements, which forced somewhat better cross-racial wage equity. And third was the country’s temporary industrial dominance of the global economy, which supported strong wage growth. 

 

The last of these inevitably passed as countries like Germany and Japan recovered their previous industrial power with other countries soon the follow. Neoliberalism deliberately killed off the first two. It attacked the already-pallid social democracy that had supported unions, regulations on capital formation and investment, and the like, and used Reagan’s 1980 election to the presidency to renew rollbacks of civil rights that have only become more frenzied. 

Making matters worse, the contemporary mainstream economics of education has come up with a fourth reason: social position, in which higher ed offers the strongest financial benefits to students who already have them.  This justifies the scramble to get admitted to super-premium universities like Yale, Duke, and Stanford, which confirm the social position that confers the income benefits.

 

The idea that students should study a high-wage subject wrongly attributes wages to subjects while depriving students of the academic freedom to study something they love. It’s likely they love it because it speaks to them in the sense of answering their sense of ideas, methods, practices that they need to be who they are.  The Bildung goal for students--with academic freedom as its basis--is more efficient for the individual and for the society, as well as vastly more ethical than arm-twisting hundreds of thousands of students to do something they don’t actually want to do. 

 

We have to confront this continuous economic harassment of academic freedom of the third kind—the freedom to study what you like, to find what fits you, to find the subjects that develop you and that you will therefore transmit as benefits to society.  Luckily, hope springs eternal on this.  And in this case, in the Financial Times.

 

John Burn-Murdoch made this crucial point for the first time that I’ve seen in the major mainstream press: learning does not equal earning; economic development and investment equals earning. His column, “’Is university still worth it?’ is the wrong question” includes this crucial passage.

 

"The graduate earnings premium . . . [is] not really telling us about the innate value of studying a particular subject at a particular institution."  This may seem obvious to you, but it is a breakthrough in public discourse. 

 

Burn-Murdoch adds that “it’s not just about what skilled jobs pay, it’s also how many there are.”  If your economy isn’t generating enough skilled jobs, then your skilled graduates will find non-graduate jobs and make less money, through no fault of their own.  If you graduate from Indiana University, the best way to raise your salary is to leave the state (39^th in per-capita personal income) and move next door to Illinois (16^th), which has more high-skill jobs.  The point here is that universities are not responsible for the graduates’ wages; corporations, investors, and politicians are.

 

The article has some interesting charts, including this one.  Earnings weakness reflects weak productivity growth, which reflects weak investment.

 

The UK's business and investment community, its FTSE 100 companies and the City of London, haven’t invested to raise productivity.  Skilled job creation has lagged and so have white-collar wages.  This has nothing to do with the kinds of learning produced by universities. 

 

Note that the share of university graduates working in the classic “white-collar” fields to which they are generically sent has gone sideways in the relatively strong economies of the U.S. and Germany.  The West hasn’t been creating enough skilled jobs, and have been blaming universities for the wage results.

 

We should be entering a new era of non-pecuniary reasons to attend university, and universities should be pushing them even harder than they are still pushing wage gains. I’ll be talking about this later this month at Yale and Illinois, if you’re in either of those neighborhoods.

 

I’ll end with yesterday’s second paragraph that got so interrupted.

 

Intellectuality recovers and transmits the past, develops powers of thinking in the present, for society as well as individuals, and breaks with the axioms of the present for the sake of the future.  I’ve been enjoying these things with workshops we hold regularly at the ISRF.  I write a Director’s Note every month, and April’s, about our workshop on Redesigning Finance for Climate Justice, appeared under the title “We Can Get There From Here,” which I used because the papers and discussions gave me the palpable sense that we do know how to reorganize the economy such that then the green transition actually happens.  We know really a lot about its mechanisms, we’ll learn many more things, other people will teach us and each other, we’ll experiment, accept, and reject, and the unfolding of thought will solve even the worst problems—as long as basically dumb power doesn’t put itself in the way.

 

Hoping that for tomorrow and the days to come.

 

 

UC Board of Regents, March 2017    

That is the question.

This is the answer: Never.  

Or not at least until the campuses fight and change current Office of the President (UCOP) budget ideology and practice. They have never done that.  Not yet.  

I’m going to compare UCOP’s January state budget show with their offstage borrowing.  State funding yields little, while the debt yields a lot.  

I’ll keep my eye on two major implications for the campuses. The first is a lock-in of structural deficits with continuing cuts to the educational core--to both teaching and research.  

UCLA remains a case in point (Liner Note 48). At the UCLA Faculty Association Blog, Dan Mitchell has found a current-year deficit of $290 million, and a three-year cumulative deficit for UCLA of $1.37 billion and counting.  UCLA’s Council for Planning and Budget (CPB) has released a March update to their fall report that is close to this deficit estimate (see Table 4, DMS p 18). UPDATE March 26: Interim CFO reports, "Based on approved spending plans and current planning assumptions, UCLA’s closing deficit on central accounts for FY26 is projected at approximately $220 million" (email to UCLA community).

The second implication follows UCLA CPB’s confirmation of their previous finding that academic units and student affairs run small or zero deficits, while the big deficit spending comes from senior management initiatives (DMS 2).  Management initiatives may be crowding out academics through the former’s access to deficit spending and the proceeds of institutional borrowing that faculty units lack. 

To track both of these issues, every campus is going to need UCLA CPB-style vigilance from their Senates, for starters.  Much more light needs to be shed on this matter of academic units being made to pay for losses run up by non-academic other stuff.

∞∞∞

UCOP’s January budget presentation to the Regents’ Finance and Capital Strategies (Item F1) was oblivious to all this. Nathan Brostrom, system CFO, delivered it as usual, with his regular junior partner, Caín Diaz, Associate VP for Budget Analysis and Planning. Their theme was budget victory and enthusiastic Newsom support.

“The Governor introduced one of the strongest budgets . ..  that we have seen in the past two decades,” Brostrom said. That is like saying, “the Governor’s ramen noodle dinner tonight is one of the best ramen dinners of the last twenty nights.”   Click here for further discussion of UC’s Ramen Decades. But even this was an overstatement. Brostrom’s triumphalist framing headed off serious questions from individual regents about the adequacy of the governor’s offer.

In the Governor’s January proposal for 2026-27, the only good surprise was that he proposed actually to pay UC the full increase mandated by the Compact that he had signed, rather than deferring it as he usually does.  For 2026-27 the governor is proposing to keep his word! Again! This future miracle likely caused much of the room’s relief. 

The Governor’s proposal for the state allocation is better seen than heard.

FIGURE 1

In fact, the Governor is still not keeping his word on the current year, 2025-26. The 7% increase they described comes from giving back two pieces of the withheld 2025-26 Compact funding ($96.3M and $129.7M), while even next year not sending the third piece. $144.5 million remains deferred until 2027-28—after Newsom has left office.   

Well what the heck, because Brostrom and Diaz covered for the governor by misdescribing their own November 2025 budget request. At that time, they had asked for a $702.7 million increase in UC’s base budget from the state and $1.36 billion in one-time funds for deferred maintenance and related projects. The first amount came from the Compact’s 5% increase plus all past Compact increases on which the state reneged. The total ask rounded off to $2 billion.

I’ve explained why I thought this was asking for a minimal, carb-only budget (Liner Note 44).  But the total was big by ramen standards.

Here’s their January summary of their November request.

FIGURE 2

Brostrom and Diaz simply leave out their requested $1.36 billion for their deferred maintenance and related problems (already lowballed as $9 billion in Figure 6). They don’t explain what actually happened: that Newsom reduced the requested $702.7 million to $480.3 million, minus another $8.1 million for housing debt service, leaving $472.2 million. This is 2/3rds of November’s request for continuing base funding and less than one-quarter of UCOP’s overall November ask. 

Brostrom and Diaz didn’t point out Newsom’s reduction. Nor did any regent mention the apparently unmentionable: the state budget is nearly $250 billion, and Newsom could fully honor his UC Compact on base funding with an additional 0.05% of that. Better, apparently, not to mention the logical conclusion that Newsom (and the Democratic legislature) really don’t care too much about UC.

In the blue bubble—the funding Newsom offers—UCOP has thrown in nearly $300 million called “TSP + Asset Management Strategies. This gets the apparent total of new funding back up there in the $700 millions!  But TSP stands for Tuition Stability Plan, meaning it’s student not state money, and the assets being managed are also UC’s.

Inflation, the slide notes, means UC has an additional $937 million in costs for doing exactly the same thing as this year.  So UCOP has gotten half of what UC’s campuses need just to meet inflation. 

This is obviously bad news for the campuses—it means continuing structural deficits that will grow without further cuts. 

And yet you won’t hear doubts about UCOP’s deal for UC campuses in an open meeting of the UC Regents. The Brostrom spin was exactly the opposite, in which the Governor loves UC and proves his love with his powerful fiscal outlays.

With these misleading presentations, UCOP has turned the Board of Regents into a clinical case of hyponormalization. I’ve noted this before: “In hypernormality, the system’s dysfunction is widely noted. In hyponormality, information is withheld and discussion is blocked so that dysfunction can be denied. In both cases, administrative authority is maintained as program damage propagates through the system.”

In sum, the January presentation hid the deficits in what we might call UC Academic.  The meeting sailed on, obvious to programs dying of induced cost disease along the shore.

Does UCOP have any plan?  Well yes. Their same one plan!

FIGURE 3  

 One genuine success has been the increase in the share of UC students who graduate debt free. Affordability is extremely important, and when the regents hear directly from students the students always stress how strapped they remain financially.

However, high “return-to-aid” comes out of gross tuition receipts and lowers the revenues that support operations on the campuses. 

The affordability politics feed the rest of the UCOP plan, which is to continue to overcrowd UC campuses, in large part via enrollment growth the state doesn’t fund, offering the legislature a political bona fide for which UC gets nothing in return, while UCOP affirms the commodified B.A. as workforce preparedness, which in turn supports degraded learning conditions on the campuses.

Sorry it’s not better news. My point is that it doesn’t have to be like this.

Note that the theater of state budgeting is fought over puny amounts that offer no meaningful change year after year.  Meanwhile, if UCLA is typical, campus academic units live within their budgets, which are reduced in every typical year by inflation and politically-driven enrollment growth. 

The real money and any financial fun is clearly elsewhere in the UC budget.  Here we arrive at what presentations in the Board’s open finance sessions never directly discuss. That is UC Business—and their enormous debt.

∞∞∞

Here’s a new wonderful chart to show what overall UC operating revenues look like.  It runs for the better part of a decade through the most recent UC Financial Report.

FIGURE 4  

Because accounting conventions classify state appropriations as non-operating revenues, I’ve added them here.

Start with the $10 billion mark ($10,000 thousands) : I’ve arbitrarily pegged a reddish-brown line there, which tracks inflation since 2018.  This is not consumer inflation but the Higher Education Price Index (HEPI, designed to reflect what colleges and universities actually spend money on.

With one major and one minor exception, all UC revenues are at or below the $5 billion level– net student tuition and fees (orange), state funding (magenta), federal research funding (dark brown), and so on. Every one of these revenue sources fails to match higher ed inflation.

The minor exception is “Educational Activities, net.”  In spite of its name, it is “primarily medical professional fees” (Annual Financial Report 2024-25, p 21). 

The major exception is “Medical Centers, net.”  Their revenues (not profits!) have doubled in seven years to top $25 billion.

In short, the only way to be at UC and get resources that beat inflation is to generate medical income. Everything else—UC Academic —is flat or falling relative to inflation.

This is a Tale of Two Universities of California. The academic core is 20 or 30% of the total budget (around 30% if you rightly include research grants, Display 1). To repeat, it experiences steady fiscal stagnation and real-dollar decline. 

Medical operations are at least half of the remainder. They leverage the brains, the research, the tremendous energy of the faculty and staff of both the Academic and the Business sides—UC Health is a very high-end knowledge business the capabilities it houses and expands are obviously admirable.  The issue here, though, is that they experience continuous and exciting revenue growth  (“Budget for Current Operations,” 2025-26, p 4).

Were you a financial manager, which part of the operation would get your best care and feeding? Which part would most engage you as a regent, when forced to endure the state’s shell game in Figure 1?  

Personally I vote for the medical side. After a quarter-century of UCOP failure to get adequate funding increases for the core, my managerial alter ego might have given up on that.  (I define “failure” in charts like Figures 4 and 5 here.) 

So back to UC Business. Getting those huge revenues in UC Health actually costs a lot. The medical centers have very high staff and “supplies and materials” costs. Billing and compliance are an endless nightmare. University medicine also needs a steady diet of capital projects.  Capital projects require a steady diet of debt.  

A core feature of UC financing that Brostrom and Diaz don’t bring up in the open meetings is the growth of UC debt.

FIGURE 5

 

UC total debt has doubled in this same period. Totals vary slightly, but we can round UC’s total long-term debt on June 30, 2025 to $40 billion.

UCOP adds billions in debt every year. They took on $3 billion in net new obligations in FY25 (Table 13.2a). Their net borrowing in FY25 was in the range of what they received in state funding.  Accordingly, UC spent $1.3 billion last year in debt service (MDA.3, p 18).

Is this massive debt growth supposed to go on forever? And what does the debt actually build? Not all of this is medical debt.  But really a lot is. 

Where the debt actually goes came up in the January Finance and Capital Strategies Committee meeting in the form of a question from the only UC regent who exercises financial due diligence in public, Schwarzenegger appointee Hadi Makarechian, zooming in from the flight deck.

FIGURE 6

 

I’ve edited the exchange for length and clarity (@ 32’).

Regent Hadi Makarechian: We raised some bonds just last year. . . . How much of that is going to be football construction and expansion?

CFO Nathan Brostrom: we did a $2 billion bond issue in December. It was actually massively oversubscribed. We actually had over $5 billion of orders. So we actually increased the amount to $2.2 billion. 
That was almost all for new construction. A lot of it for our medical centers, for the San Francisco project, for the Davis project. We are doing another bond issue at the end of February, which will be almost entirely for refunding and refinancing. 

Yes, UC borrows so much that refinancing is a continuous issue. And it is pleased that market demand lets it borrow even more.

In the initial presentation, Brostrom noted proposed legislation that would get the state back in the business of issuing General Obligation bonds on its own credit and using the proceeds to fund UC and CSU construction.  The state did this for decades—it’s how it built UC and CSU, covering financing costs with tax receipts because the resulting academic buildings and large, high-quality campuses were a public benefit. The state stopped issuing general obligation bonds for higher ed this around 2006, during the Schwarzenegger years, so UC has had to use revenue bonds instead, meaning that interest must be covered by revenues generated by building activities (student rents in housing, patient fees in medical buildings; some discussion p 81).

Brostrom said more about the strategy.

NB: The bond issues that I mentioned in our presentation would be state GO bonds, general obligation bonds. So they would not be our obligation. We're going to be advocating for those in particular, because in our med centers and housing, we have a revenue source to repay them, but a lot in the education and research buildings, we don't have a ready revenue source. 


You might assume that student tuition and state funding are revenue sources. But they don’t work the same for rating agencies, and there isn’t actually any to spare to fund capital projects for UC Academic. General funds plus tuition don’t properly cover campus operations, and hence the deficits.

Makarechian persists on this point.

HM: Aside from those [prospective future GO bonds], what is our debt capacity . . . that's left for us?

B: So, right now, we have $30 billion of outstanding debt in our general lien, as well as a second lien for medical centers, and then a third lien for housing. That doesn't include any of the P3 projects that we have done. That's just our straight debt.

And the total rounds up to $40 billion.  (See Table 13.2a for some amounts and flavors.) Back to the exchange.

NB: You know, the good thing about the projects we've been doing, both on the medical center side and on housing, is that they are accretive in debt capacity. 
They create debt capacity, because we're adding beds that will have a revenue stream with them. Where we have less debt capacity is for education projects or research projects, where we're actually often times pledging our indirect cost recovery or other revenue sources that are threatened now.

So we have to be much more careful with those projects than with the-- I think most of the projects you're going to see are going to be in the health area and in housing.

HM: Yeah, but that's the side that limits our capacity for growth, because if you don't have classroom capacity or labs or whatever--they're not revenue, they're not housing or food services and all that stuff--but if you're limited in that area, then we couldn't accept more students.

That's really the gist of my question. What sort of debt capacity do we have left for that kind of expansion?  Because I don't think we can expect much from the state on that side.

B: Yeah, that's, um, uh, I'm not going to give a hard number now, because the rating agencies will slap my hand after this, but we did just get our ratings reaffirmed at AA, so, I will work with Meg, and come up with what we think are our current. It's usually a range, Regent Makarechian, because of the range and interest rates.

Actually, if Brostrom answered the question, the hand slapping would come from his own campuses.   At this point, Makarechian folded. “I’m good with the answer,” he said, even though he didn’t get an answer about debt capacity.  Brostrom managed to avoid having to tell the regents when UC might have to stop covering major costs with borrowing, which touches on the issue of when it would have to stop building.

Brostrom did clarify his thinking about the distinct funding status of UC Academic. To build a campus research facility, UC has to pledge “our indirect cost recovery or other revenue sources that are threatened now.”  Research doesn’t generate net positive revenue like new customers do—students paying rent or board, patients paying high American medical fees.

Nor, for Bostrom, can teaching fund borrowing. This is an interesting perspective, since finance does see students as customers. But California student customers don’t pay enough per Assignable Square Foot to build a new classroom, library, or student affairs building, given construction costs.  On the other hand, high growth in patient revenues creates huge revenues to expand debt capacity. This is obviously the better business.  Hence the strategy of campus overcrowding, and of using UC debt capacity for the businesses like medical and housing. 

I’m shocked by UC’s steady accumulation of debt. But it bothers me not so much because I think UC faces insolvency, which I don’t.  Its asset base is just too massive--$112 billion--and its net position, largely because of market gains, was $11 billion in FY2025 (Table MDA1).   The debt bothers me because it covers up, and even accelerates, shrinking academic capacity on the campuses.  And UCOP is all in on the strategy.

∞∞∞

Okay, this is getting a bit long even for me, so let me make one final point about deficits in the UC system overall.   What I see is that massive revenues do not give UC comfortable or stable overall margins on operations. Massive borrowing likely makes them worse.

Take 2024-25, which is close to a best case (markets up, endowments up, pension and retiree health benefits more manageable).  Narrating  their figures of “primary activities” (Table MDA.3), UCOP concludes, “revenues associated with primary activities exceeded expenses by $1.6 billion in 2025 primarily due to the decrease in pension expense and retiree health benefits expense. In 2024 and 2023, expenses exceeded revenues associated with primary activities by $0.5 billion and 2.2 billion, respectively.”

In other words, UC’s “primary” operations lost $2.7 billion in FY23 and FY24, and then swung positive in FY25 because of lower benefits costs.  In spite of massive revenues, and the constant feeding of UC Business, UC overall isn’t reliably running in the black year after year.

As I stare at Table MDA.3, I can make FY25’s positive income go away.  As is regularly the case, “operating revenues,” which lose a lot, are saved by “non-operating revenues,” and state funds indeed should be counted as operating revenues. However, UCOP books $2.2 billion in “Private gifts, net,” yet states in the notes that “the annual income distribution transferred to the campuses from endowments held by the University was $620.4 million” for FY25  (p 100-01). The campuses certainly got private gift revenue from their campus foundations, but UCOP doesn’t say how much.  Is cash flow from gifts really over $2 billion and not closer to $1 billion? 

I’m not comfortable with this. The same goes for the additional $1 billion in Other Revenues, defined as “including unrestricted investment income.”  This revenue is also a creature of market performance.

If we want to know how UC operations are doing, and include only education-based “non-operating” revenues (state funding, “Direct government grants,” and “Federal Pell Grants”), UC in FY25 stayed in the red. Not by much--$280 million.  But it looks like the University, with its enormous revenues, huge fiscal complexity, and titanic financing efforts, is barely scraping by.

In short, given the current model, UCOP will not be fixing the campus deficits.  Like never.

∞∞∞ 

At the end of the September 2025 meeting of the same regents’ finance committee, and a long delicate discussion of the Tuition Stability Plan renewal, its chair Michael Cohen thought it was over, and then saw a request to speak.

Q: I have a quick one, and I recognize I've been with the system for only 18 days.

Michael Cohen: Yes. Please, please add your insights from 10 days. 


Q. So, basically I’m all for affordability and low indebtedness for our students, completely committed to that. At the same time, the plans that we have, where we guarantee the tuition for student cohorts for five years, I mean, it's admirable, if we can afford it. The question is, can we afford it? 
Because all our costs, faculty costs, staff costs, student employee costs increase annually, not every five years. So, I think the structural deficits will keep increasing with this model. In my opinion, but again, I've been around for only a few days. 


CFO Bostrom: Truth is, the way it works, once you get fully baked in, it does increase by 5% every year . . . it's a 20% increase for the new class that comes in. So, it does average out to be 5%.

The questioner was Dennis Assanis, the new chancellor for UC Santa Barbara.  He went home and (re)did the math, put up a “transparency” website (99% data free!), and imposed cuts to UCSB Academic of 10%.