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Monday, January 14, 2013

Monday, January 14, 2013

Addressing the Austerity Lock-in at Public Universities

California continues to show public universities the way towards a permanent austerity.  Governor Jerry Brown's budget proposal for 2013-14 (summary for higher education), released January 10, is a case in point. It raises once again the question about how to respond, which I'll discuss below.

A quick review: The budget provides $125 million in additional funds (the other $125M of a reported $250M was a Prop 30 tuition buyout for last year), and will still leave UC 19% below its 2007-08 state funding level in dollars unadjusted for inflation, enrollment increases, or new expenses for benefits etc. (Department of Finance figures p. 35).  After two additional years of the proposed 4 percent general fund increase, UC's general fund will be around $2.86B, still below 2010-11, the last year before Gov. Brown took office and cut UC and CSU $750M each.  In practice, less than that will flow to UC campus operations: see my discussion of the Regents' November budget for an explanation).

At that November Regents meeting, UC Executive Vice President for Business Operations Nathan Bostrom summarized the problem, with Jerry Brown in attendance.

UC has absorbed nearly $900 million in State funding reductions over the past four years, nearly 30 percent of the State funding for UC. Tuition increases have addressed about one-third of this reduction. The level of State funding for UC was now at the same level as it was in 1997-98, when UC had 75,000 fewer students, one less campus, and fewer degrees and programs. On a per-student basis, UC core funding, including both State funding and tuition, was currently 25 percent less than it was in 1990. The University has absorbed some of these reductions through administrative efficiencies, but for the most part, these reductions have undermined the quality of UC’s core academic programs, through freezes on faculty hiring, stagnating faculty salaries, insufficient support for graduate students, and increased student-faculty ratios. The University hopes to take advantage of the stability of the next few years to address and reinvest in quality. (Minutes pp 3-4)
Mr. Bostrom went on to note that UC newly contributes an employer share to the pension that is $800M this year and will be $1 billion next year--which is equal to about a third of the state's general fund share.  The result was depicted in the Budget for Current Operations 2013-14:
This UCOP chart shows a $2.9 billion structural deficit in four years time, on the current budgetary trajectory. Clearly there is little chance for UC "to address and reinvest in quality." There is also an ongoing, serious budget crisis on a systemic level.

Governor Brown's budget offers two colliding frameworks.  One is that "The state must begin to reinvest to improve the quality and affordability of California’s system of higher education."  The second is that the state's universities have more than they need and have again asked for too much.  The second framework dominates the first.

The Governor presents the latter in detail: UC has asked, he says for a budget increase that is three times greater than the growth in state personal income, all while making itself unaffordable and being unproductive: "just 60 percent of students earn a degree in four years at UC" (and 16 percent, he notes, at CSU).  He also implies that tuition hikes have been gratuitous as well as damaging. He further suggests that any real gap can be closed with more technology.  There is more than a hint that California higher ed is a welfare queen that is unable to reform itself. In this context, before it gets anything more, it needs to be subject to a kind of welfare reform from outside.  Thus even as he calls for reinvestment, he justifies the small (and in the context of the cuts, a net negative investment) through a paired framework of the greedy undeserving.

How can public universities confront an austerity trap constructed out of this ambivalent double framework? How can they escape an austerity trap when when laid with the skill of the original Austerity Democrat Jerry Brown?

In fact there are remedies that would work, were they in fact implemented.

  • Constantly correct mistakes in the public discourse.   The $250M increase was widely viewed as good news for UC and CSU.  Bob Samuels' analysis is an exception, and is essential reading for those wondering whether UC's decline will ever but be halted. But nearly all coverage (UC FA Blog, CSU Chancellor's office, NatureChronicle of Higher Education) reported  that UC and CSU got good deals. One major reason is that UCOP offered its standard uncritical gratitude to the governor, rather than also politely pointing out that it asked for a 6 percent increase in state funding, not 12 percent, recalling the previous year's $750M cut, noting projections of large budget surpluses over the next five years (Chapter 1, Figure 2) and sustained personal income growth of 4-5% per year (Chapter 2, Figure 2), and calling for more than a partial backfilling of existing deep budgetary holes.  Public universities need truth squads.  As it is, the dominant framework assures continuing, deepening inadequate resources.
  • Explain clearly that technological improvements will not close the budgetary gap.  Unfortunately UCOP is a negative example here: it promised $500 M in savings through technology efficiencies that have yielded about a tenth of that (see links halfway down this post on the Regents' retreat). And it is gearing up a new round of technology promises for this week's Regents meeting, now in the form of online education.  I defy anyone to find meaningful cost savings in the gradual introduction of quality (blended) online instruction to any of higher ed's segments. I invite you to scour the full rush transcript of the MOOC meeting at UCLA last week; or to read full scale investigations of online impacts like Taylor Walsh's pro-tech Unlocking the Gates, which shows for example that simply posting course materials in the case of MIT's Open Courseware program nets the university negative $4M annually (page 84); or to go to the source of the original analysis of academia's "cost disease," William J. Baumol and his new book The Cost Disease; or to contemplate the extent to which online providers expect not to make money by offering newly cheap university curricula but by selling referrals and other ancillary products by competing with universities.  Or picture yourself as a venture capitalist, and ask if a one-time $10M investment has ever in history closed a $2.9B gap. Technology has become a source of budgetary delusion and fake solutions and this has to stop.
  • Define desired results of a 21st century university degree and show what it costs. Public university administrations have not explained what current instruction really costs and why. The faculty in its official capacity has not defined the processes, practices, and outcomes that it expects from 21st century education in conjunction with society. (There are many scholarly exceptions but these are not part of official discourse.)  People will pay taxes for concrete benefits whose cost structure has been clearly justified--research costs included. Three major cut cycles later, most of this work still lies ahead.
  • Tie higher education funding to personal income growth.  This would vastly improve public university funding if it also comes with an elimination of disproportionate cuts. Although tuition rises faster than inflation, public funding has risen well below income growth. Stan Glantz and I are circulating an op-ed on this subject and it will appear somewhere--possibly in this space--later this week.
My main point is that we can change a lethal public discourse about higher ed.  These measures would work: they simply haven't yet been tried on any decent scale. 


Anonymous said...

Great suggestions--they amount to changing the "frame" of the discussion. If only we readers of your blog (faculty mostly?) were more savvy in shaping media discourse!

Catherine Liu said...

I really like the Robert Talbert link.

Chris Newfield said...

The first 2 are mostly admin - correcting errors in state agency claims about UC's budget and budget requests, and demanding real estimates of cost savings as well as HOW those savings will be achieved (e.g. by shrinking grad programs and thus saving on TA funding? by reducing faculty replacement? what exactly?) I'm doing research on this but the businesspeople need to do basic due diligence like they would in a normal organization. But the third, defining 21C public higher ed, is faculty and we don't need to be media savvy until we are clear about what we are trying to say. Catherine's right that Talbert is good, and there's lots of interesting stuff --we really need to do this right now in our own ways.

Anonymous said...

Place your finger on the top of the graph above the 2012-2013 year in the above diagram, now count 4 years over to the right to 2016-2017, now extrapolate to the right on the same trajectory for another 4-5 years? You are in a hole as big as the entire amount of money the state currently contributes to the UC and more. So if you are a regent and you really wrap your mind around the magnitude of this problem what do you do to solve it? Austerity looks to be the soup de jour for some time. Do you notice at the UC that there is no plan forward, that's what you do when the plan is backwards. Barring a massive stock market explosion, major state reinvestment or huge tuition increases the math above is the definition of unsustainable. The massive staff cuts of the past 5-6 years (no raises for 6 years for unrepresented staff employees) and the forced 6.5% pension contributions for all employees have not been enough to right the sinking ship. Now the regents and governor are cooking up some crazy pipe dream to replace the faculty with flat screens that don't earn salaries or pensions, we are watching the final Hail Mary of California's once grand higher education system I hope someone in the end zone makes a spectacularly lucky catch.

Chris Newfield said...

yes, which is to say that austerity always fails -- if your goal is success, as opposed to a leveraged buy out. To revert to football, this is a team without a passing game. It's only grinding out yardage on the run, mostly 1-2 yard gains with repeated lost yardage and fairly regular sacks. The whole strategy needs replacing. My claim is that in fact this can be done. You're of course completely right about where we end up if we don't.

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