Reframing the Doomday Budget Discussion

The agenda for the one-day Regents' meeting May is posted along with most of the agenda materials.  The budget report to the Committee on Finance has a new tone of muffled rage.

We have come a long way from 2009, when Mark G. Yudof said,  "I am compelled to note that the proposed cuts to the university, while serious, do not appear to be disproportionate."  The current discussion item says repeatedly that the campuses have already cut to the bone and are well down the path of amputation.  By page 7 it enters the cuts' absurdist dimension:

Campuses have already implemented all possible cuts and efficiencies and cannot absorb additional budget reductions without doing irreparable harm to UC’s instructional program. There are no obvious solutions to solving the remaining $139 million shortfall, so campuses will have to do what they say they can no longer do, which is cut back programs, delay hiring faculty, consider additional layoffs, and make other programmatic consolidations or eliminations to save money in spite of the detrimental impact on quality that will result.

The document identifies a current year shortfall of $847M, and a $1 billion shortfall next year--even assuming the Governor's small January revenue increases and further efficiency savings. Existing budget parameters build in further cuts in what we cannot cut without irreparable harm.  Cutting the uncuttable is what we do at UC---now on an annual basis. This document shows that we will be doing it again next year, even though we can't.

The Governor's May Revise may buy out the tuition increase that you haven't heard about, defined here as 6% for next year.
In Scenario A, in which good revenue numbers come in, the state provides an additional $125.4 M to avoid this increase.  As the UCLA FA blog has pointed out, receipts are actually behind projections.  This increases the likelihood of Scenario B, which is the 6% increase. Looming in the background is the unidentified Scenario C, in which revenues are behind, the November tax increases fail, UC is subject to a further $200 M cut, and that tuition increase is doubled to at least the low double digits. 12% would bring the base tuition to about $13,700 next year, plus the "Student Services Fee" of $972, plus multiple campus fees that would bring tuition to about $17,000 for in state students.

Since no existing systemwide scenario eases the downdraft on the campuses, they are likely to repeat this year's record explosion in the admission of out-of-state students -- up an incredible 43% from 2011. Denials nonwithstanding, out of state students are displacing California applicants, particularly at the most prestigious campuses where rejection causes the most disappointment. Out of state admissions is also impairing the university's mission of racial inclusion. The endless austerity crisis has distorted administrators' better judgment, which used to see out of state tuition as useful revenue source only at the margins.  A variety of posts on this blog (here, here, and here) have shown that non-resident tuition doesn't come close to filling in cuts until you blow past the old Regents' reference point of 10% of total undergraduate enrollment--towards the 20%+ range for Berkeley, and already 13% for UC as a whole (Table 6).  The UC Berkeley administrative proposal to give each campus its own Board of Regents is a similar kind of Hail Mary pass (see Michael's coverage): Having 10 Boards of Regents plus the Big Regents would be an obvious act of administrative insanity. But it would allow each campus to set its own tuition, which means allowing each campus to raise it more or less at will.

All of the current administrative solutions are perverse and/or unsustainable.  Public universities cannot solve their financial problems by raising tuition even more quickly in the face of the tuition bubble, the student debt bubble, public anger after decades of similar annual increases at 3-4 times inflation, a pro-education president who is campaigning to punish tuition increases with further funding cuts, and mounting damage to an entire academic generation symbolized by the recent tripling of the number of PhDs on food stamps.

A chilly ray of hope appears in the form of a "framework" for multi-year state funding increases that UC officials discussing with the governor (page 4 and Attachment).  The description in the Regents' materials doesn't quite square with the relevant State subcommittee hearing discussion on March 15th, but both versions actually continue to reduce the state's commitment. The state would increase UC general funds over four years by an amount that is cumulatively either somewhat below (4% a year) or somewhat above (6% a year) what Jerry Brown cut in his first year.  This "new normal" would be lower than it seems because UC would now have to fund General Obligation bonds and retirement payments out of their base budget (this reverses what the Regents assumed as recently as January). UC would be subject to performance audits and "curtailed" tuition increases, so there is no sign that the tuition safety value, undesireable though it is, will in fact be under UC's control.  Although UC could not reduce California resident student numbers below their 2011-12 levels, the state would also not again fund enrollment growth.  UC would thus have a financial incentive never to admit a single additional California resident, especially when it could take a non-resident.  The social and political implications go without saying.

The conclusion is that traditional incrementalist negotiations with the state are hopeless. It is as bad with Democratic Brown as it was with Republican Schwarzenegger. I enjoy speculating about the precise nature of Jerry Brown's emptiness, but none of that will change this simple fact: UC will go nowhere except down if it cannot come up with a multidimensional educational mission and a full-scale budgetary framework of its own.

My adamant suggestion is that UCOP change the discussion by giving it a completely different starting point. UCOP should write a budget scenario for the Real UC.  This would out where UC should be now financially, including the costs of research and pension contributions and capital costs and upgrades in educational quality in response to on-line learning and everything else. Some of us already did our own version via the Senate research that went into the Futures Report and the Choices Report.  The new starting point should use the Hays-Glantz report that shows the affordable cost of rebuilding the low-tuition, high-quality UC of 2001.  Use this work as a base, or start over and do it better.  Ask and answer the basic questions: if cap tuition at around $12,000, where should the general fund be? If we roll it back, what do we need? If we have a $1 billion deficit next year, what would a non-deficitary budget look like?  Take the report and present a Quality UC budget to the Regents in July, downplaying all the obvious caveats that the state doesn't want to fund it, while it sketches where UC really should be. Do multiple pathways, various scenarios and timelines, different revenue mixtures. We need a new framework of our own, not one dictated by the embedded history of doomed discussions that have been pushing us down our downslide slope.

Give this a try.  It would be fun, it would galvanize the UC community, it would deeply interest the California public that is tired of getting less for more, it would wake up the Califonria media.  And it can't possibly be less successful that what we are doing right now.  We need to get out of this devolutionary spiral, and the only place to start is to tell the educational and budgetary stories that we want to be told about ourselves.