Open Letter to UC President Janet Napolitano on Fundraising

Dear President Napolitano,

You have now been the president of the University of California for nearly five years. You are one of a handful of people who speak for the entirety of the university system. You are the head of a slightly larger group (two or three dozen?) that decides UC policy.  You also have direct access to the mass media to explain the needs and benefits of UC. 

You represent a university that consists of hundreds of thousands of students as well as about 150,000 staff and over 10,000 faculty. Many of us have given decades of our working lives to UC. We have deep experience of the institution and highly developed expertise in our subject areas.  And yet with few exceptions, we have no way of bringing this expertise to the wider public.  As a group, our views are as unknown to the state at the end of our thirty-to-forty-year careers as they were at the beginning.  

This places an enormous moral responsibility on you to represent hundreds of thousands of silent people correctly. It imposes an enormous intellectual responsibility as well.

As the representative of the university, your intellectual responsibility is of course to tell the truth: universities that replace truth with politics and marketing steadily lose public trust, as they should. By "truth," I don't mean a fixed obvious fact we can kick. I mean the current state-of-the-art on a topic, created by open methods, testing, and debate, and subject to further revision as better data and interpretations arise.  The job of universities is to determine the truth defined as an issue's state-of-the-art understanding, which in all areas continues to evolve.  This means that university administrations are in the position of having to keep up with the state-of-the-art in relevant fields as generated by their students, staff, and faculty. 

One field that administrations must keep up with is higher education studies.  As a scholar in some of its most pressing subfields, I sometimes feel that senior administrators are running away from research findings rather than embracing and acting on them. 

A case in point is university philanthropy.  Last week you met with CSU Chancellor Timothy White "to discuss the future of public higher education."  The Daily Cal coverage ended with this:

Napolitano also discussed the role of philanthropic financial contributions in the UC’s financial model. 

“We have very generous donors, and if we look at the trajectory of philanthropy in the UC, we see a pretty steep upward curve over the last 10 years or so,” Napolitano said at the conference. “The point of fact is that public funding at the level it was at is unlikely to be restored, and we’re going to need to continue that upward trajectory in terms of philanthropy to support the UC.” 

This tells the audience that private donors have been and will continue to compensate for the decline in public funding. It accepts that the public funding will stay inadequate, which demobilizes the 62 percent of California adults who "say the level of state funding for the public higher education system is not high enough."  It states that fundraising, which has been a central UC fixation for at least 25 years, can grow indefinitely, and increase its share of UC's budget.  

These venerable beliefs are not correct.  But they have remained in place over many years because we have never had an open, research-driven, fact-based debate about philanthropy in which the need to increase fundraising was not assumed in advance, and in which administrators review and then follow data-based research findings.

For example, UC's most recent report on private support finds that annual giving has doubled over the past twenty years (1). That is a good thing: philanthropy funds many important specific projects that would otherwise languish.  But research has shown something you no doubt also know: philanthropy growth is not relevant to the public funding shortfall.

The basic problem is scale.  In 2006, my Senate colleagues and I showed this in a report that was transmitted to President Dynes in 2006 and presented to the Board of Regents in 2007; those slides are here).  We noted that the University, which was already down $1.35 billion in general fund allocation from 2001, would need a $30 billion gift to replace this revenue stream.  Our internal joke was that fundraising could fix UC's general fund problem-- if UC nationalized Harvard's endowment.  We are right to be proud that UC's generous donors now give $2 billion or so to UC every year.  That generates $100 million a year at 5 percent interest, which is about 3 percent of UC's current general fund revenues.

Another UC report this year, which the Board of Regents read at their recent retreat, confirmed this conclusion.

Philanthropy to the UC system and its campuses has risen by 50 percent since 2000, and now totals more than $2 billion per year. Virtually all of these funds are restricted and are not available to support general operating costs. Even if philanthropy to UC were to double in the next 10 years, the increase would nominally offset only a quarter of the decline in state funding per student since 2000, and the additional (private-interested) activities required by the philanthropic funding would lead to an even smaller offset for educational (and public-interested research) activities. Fundraising may help with capital costs, but it is much less likely to be a significant income source for ongoing educational costs. (39)

This new report supports fundraising but not as a replacement for public funding.

I'll belabor a few other issues that reduce philanthropy's net returns to the University.  Fund-raising cost indices suggest that the overhead for raising a dollar is about 20 cents, so initial net is perhaps 80 percent of the gross figures we publish.  Many gifts leverage matching funds from the University, so the true net after costs is quite a bit less than that, or even negative (UCLA's Luskin Center received a generous donation of $40 million for a project with overall costs of $162 million).   There are other subtractions: the doubling of UC fundraising needs to cover nearly 30 percent more students with inflation lowering the take another 20 percent over that ten year period.   There are institutional burdens: the donor model has spawned hundreds of school, program, and department-level fundraising programs across the UC system, whose costs in time, money, and loss of resources for the educational core have not been calculated.  More indirectly, talking up private funding may encourage the state not to rebuild public funding to 21st century requirements.  (This is a feedback loop that, given years of inadequate annual general fund increases, UC officials should consider seriously.)  And this is not an exhaustive list of issues.

As a true believer in universities, I am always sorry to find so much fault with our belief in a cherished source of revenue. But we can thank our generous donors, encourage new ones, and tell them the truth that we need to fight like mad to rebuild the public funding base that makes their giving valuable. 

I'll wrap up with a question: why are public universities competing with privates on our weakest (and their strongest) ground?  The source of UC Berkeley or UC Irvine's comparative advantage has been strong public funding.  The source of Stanford's and Cal Tech's has been great private wealth. Why don't we try to advance on our own terms?

You no doubt carefully reviewed the New York Times's major college access study a year ago.  Called "Top Colleges Doing the Most for the American Dream,"  its authors devised a College Access Index that ranked colleges and universities "based on a combination of the number of lower-and middle-income students that a college enrolls and the price it charges these students."  

Here are the top 10 places, where UC put in an astonishingly good performance. 

These figures make intuitive sense-- except perhaps for those in the final column, endowment per student. They show that UC campuses are simply not in the big endowment game. UCLA, the wealthiest UC, has a per-student endowment that is 1/50th of Princeton's. Access champion UC Irvine's endowment is 1/116th that of neighboring Pomona College. And so on. These are the results of 25 years of consistent UC fundraising focus.  They are also normal: public universities top out at $250,000 and $220,000 per student (University of Virginia and the University of Michigan, Ann Arbor) and the list plunges rapidly into the 5 digits (UT-Austin's oil money gets it to $72,500).

We should have a broad university discussion of the evidence and conclusions to draw from it. In the meantime, these are my inferences from the research.  First, mass access to high quality public universities is distantly related to a large endowment.  Second, this mass quality is closely related to non-private sources of income, meaning state funding: rebuilding that must be job 1 for public university presidents. Third, we should pitch mass quality to potential donors as the general public good that leverages and transcends the special good their gifts do for particular people and programs. Fourth, we should brag about our small per-student endowments. They show we are working on a grand scale, producing value for the entire public that lies behind us.

Even without a full-scale investigation of UC philanthropy, you could reasonably revise future statements on this subject to read as follows:

“We have very generous donors, and if we look at the trajectory of philanthropy in the UC, we see a pretty steep upward curve over the last 10 years or so. The point of fact is that public funding must be rebuilt to support the full benefits of these gifts.  We’re going to need to continue that upward trajectory in terms of philanthropy.  But it cannot support the UC on its own. We must work at a massive scale to get the state the million additional degrees its needs.  We need the whole population to help us with that.

The cost to the median taxpayer would be low--but this is enough for now.

Loyally yours,

Chris Newfield

What Kind of World Do You Want to Live In?

Political Science Commencement, UC Berkeley, May 14, 2018
by Wendy Brown

Tonight, your commencement speaker was supposed to be John Perez, three-term California Assemblyman from Los Angeles, speaker of the Assembly from 2010-14, Latino and the first openly gay Speaker in the Assembly’s history.  Perez played a leading role in raising California’s minimum wage, improving access to higher education for working and middle class students, shepherding bills supporting green technologies and urban development, promoting jobs for veterans, and subsidizing childcare and healthcare for the disadvantaged.   Before entering electoral politics, Perez was a labor organizer and political adviser for the grocery store workers union.  He also worked in LA on behalf of immigrants, tenants, HIV/AIDS groups, and coastline conservation.  Since 2014, Perez has been a UC Regent, where he has worked to cap tuition and improve access and matriculation by under-represented minorities.  Perez has dedicated his political life to the under-served, vulnerable, neglected or threatened….not simply anointing their wounds but seeking ways to empower them.

John Perez is not here tonight because the American Federation of State, County and Municipal Workers (AFSCME), the union representing 24,000 employees across the University of California system, reached an impasse in its negotiations with the university and called for a series of labor actions, including last week’s strike.  AFSCME seeks for its members a modest annual pay increase and is also resisting the University’s effort to raise the retirement age and increase health insurance costs while reducing retirement benefits for new workers.  The union is also trying to limit the practice of “contracting out”—replacing workers directly employed by UC with labor provisioned by companies offering lower wages and benefits.  So AFSCME is fighting to preserve a minimally decent form of life for those who sustain our campuses—cleaning it; tending its grounds and gardens; preparing and serving food; staffing the hospitals, labs and law schools.  AFSCME is fighting the steady disintegration of a social compact designed to ensure that full time workers can obtain life necessities, have relative job stability and a comfortable retirement.   It is fighting the University’s own embodiment of the steady intensification of income inequality in the US, as the gap between the highest and lowest paid UC employees has increased dramatically over the past decade.

AFSCME asked public servants invited to speak at Commencement ceremonies to support their labor action by withdrawing from the ceremonies.  Last week, Senator Kamala Harris withdrew from the campus-wide commencement.  John Perez withdrew from ours.  This is disappointing, of course.  You only have one college graduation and AFSCME messed with it.   I heard a few students grumbling about this and also about how stressful it was as the strike disrupted campus services during finals week.

But when these interruptions and inconveniences occur, when our dreams, ambitions and milestones are striated by cries for justice or earthly preservation, they pose a question we may want to move to the front of our impatient, anxious, wanting-everything-to-be-perfect minds:  “What kind of world do we want to live in?”  One in which the nightshift janitors cleaning classrooms for decades or health care workers bathing patients over at UCSF hospitals can pay rent, afford healthcare, send their kids to college and someday retire?  Or one in which the woman selling you snacks at Golden Bear is suddenly laid off when food service is outsourced to a company with lower wage minimums and worker benefits?  Do we want to live in a world in which eight men hold as much wealth as the nearly 4 billion people comprising the world’s poorest half?  In which the black infant mortality rate in the United States is more than twice that of whites, and more black men in their twenties are in prison than college?  A world in which one in twelve human beings on the planet now inhabits those ever-growing shanty towns built from the refuse of civilization and largely cut off from the basic features of civilization--work, education, sewers, potable water, protection from weather?  In which species extinction proceeds at an unprecedented rate and climate change has become a near rather than distant existential threat?  Or do we want to live in a world in which we redeem the promise that human beings can cultivate justice and a healthy planet, not only be driven by market imperatives or be tossed about by their vicissitudes.

What kind of world do we want to live in?  How can we burden you with this question, you who are just beginning your adult life?  You who did not make this world filled with so many troubles and terrors?  You whose own futures are beset with so much uncertainty, whose prospects for home ownership are scant, whose social security my generation threatens to devour?   How dare we ask you to think about world-making when what a college education guaranteed a mere generation ago—a stable income, comfortable housing, adequate health care and, with luck, interesting and meaningful work—has been replaced by competitive unpaid internships, contract employment, whole industries and professions upended over night, urban housing crises scattering even the middle class to the hinterlands and scandalously priced professional schools inviting decades of debt-servitude?  How, amidst your anxiety about surviving, let alone thriving, and after previous generations have made such a mess of things, could we task you with this?

It’s not fair but fairness isn’t quite the issue.  If you stay with the question of fairness, you will stay with a child’s view of what can be asked of you or what you can ask of yourself--the view from powerlessness and where the only expectation is that you play by common rules, set by others.  The question of what kind of world you want to live in is an adult question:  it has bearing when your life is in your own hands, when you have a little or a lot of power or latitude, when you decide every day what to support or decry, nourish or fight.  The question of what kind of world you want to live in asks you to become responsible to and for a world that you didn’t build, where the terms of entry are not fair and can be hard.

This question is never harder to heed than when it challenges your good fortune:   when you are faced with plans for a low-income housing development or rehab facility in your neighborhood, when improving schools or building a park or swimming pool for kids in another part of the city would take a tax bite out of your paycheck, when responding to needs of workers who sustain this university might mean caps on faculty and administrative salaries and even increases in student fees.  The question is also hard when it comes into your social world:  When the MeToo movement has left you, a man, reeling and confused about how to inhabit your masculinity, or how to talk with co-workers about troubling ways you may see them inhabiting theirs.  Or when Black Lives Matter has left you, a white person, stunned about how ordinary, how truly ordinary, is the phenomenon of white people calling cops on black people sitting on a bench, using Airbnb, dozing in a college lounge or having a business confab at Starbucks…but still you find it hard to interrupt your white friends complaining about how much Black people complain about racism.

“What kind of world do you want to live in?”   The hardest challenge this question delivers to those of us in groups with historical advantage comes when we have to dismantle that advantage. When seats at top law schools are scarce, when good jobs at non-profits are precious, when internships with politicians are gold, when academic positions are shrinking, when working for a great start-up or big tech company is a dream, it is hard to accept graciously and without rancor the importance of holding the doors open extra wide for those from historically excluded groups.  Why should you pay personally for the racism or sexism of the past?  This is when switching the question from “what is fair” to “what kind of world do you want to live in” is crucial and can be life-changing.   Do you want to live in a world where the top echelons of the top professions remain mostly white and male? Where women and people of color disproportionately fill the social and economic basement?  Where the administration and senior faculty of your university are mostly white and the cooks and janitors are mostly black and brown?   The point is not to shift the question from one about yourself to one about the world—it is not to replace selfishness with selflessness or become creatures of bottomless sacrifice.  Rather the point is to mix the questions of what you want to be and do with what you want this world to be, and let that mixture pave your way in the adult world.

I am not tasking you with addressing all the world’s problems or with dedicating all day every day to political activism.  Not even someone as justice-minded as John Perez does that. Nor is this a sermon about ethical living –reducing your carbon or injustice footprint, which is fine but not the issue here.   I am suggesting a way to frame some of your biggest and smallest decisions.  What do you support, with whom do you stand?   What do you oppose?  And what do you do when challenges come, unbidden, into your midst, as the AFSCME strike did when it broke into your final week on campus and your graduation?

Asking yourself “what kind of world do I want to live in” invites you to imagine utopias--in which there really is equal opportunity for all human beings to realize their dreams; in which there are no women abused, children trafficked, peoples colonized, species imperiled, mountain tops blown off and coastal waters drilled for dirty energy;  no slums, homelessness, wars, refugees or climate change, no racialized and gendered orders of regard and treatment.  But this question also invites you, in the ordinary thrum of life, to find the grace, and not only the grit, to greet every crossroad, and every surprise on the road, as an occasion to choose on behalf of the world you want live in.

The 24,000 AFSCME workers of UC intruded their struggle for justice into the celebration of your extraordinary achievement today.  Perhaps that intrusion is a gift to the Class of 2018—not tarnishing your moment but enriching it. As we applaud your hard work, congratulate you on your soaring accomplishment, and cheer on your brilliant and promising futures, let us affirm what is also here, marked by John Perez’s absence:  a call to make the kind of world you want to live in.   As we celebrate you tonight, rather than sidestepping or ignoring the union’s quest for a decent existence for all, I invite you to incorporate its spirit into yours.

Congratulations.  Go forth!

Governor Brown Renews His Commitment to Educational Decline

Governor Brown released his May Revision of the California budget.  His higher education revisions suggest little beyond his continuing refusal to recognize the challenges of contemporary higher education and the social need for an expanded and deepened system of tertiary education.

Perhaps the most significant new element in the Governor's proposals is his announcement that, if either CSU or UC choose to raise tuition, the state will lower its general funding in the exact amount that the State must increase funding in Cal Grants to cover the raised tuition (7). As Dan Mitchell has pointed out, this does not mean that either UC or CSU will lose all the revenue from tuition increases.  They may therefore be tempted to raise tuition.  But it does mean that the Governor is setting the most important source of tuition aid for Californians against the general needs of improving the campuses.

As early as 2013 then Speaker John Pérez warned that UC could not expect the State to "buy out" proposed tuition increases and during the tuition freeze the state warned that it would lower base funding if the sectors increased tuition.  But the State did increase general fund revenues last year--even with tuition increases.  Now the governor is refusing to do that again and playing a game of explicitly setting off the financial needs of poorer students against the funding needs of improving education.  Not only has he offered a lower base increase (3% as opposed to the 4% that had been expected under his compact with President Napolitano) but he is now proposing that Cal Grant funding be treated as a trade-off for base funding.  He is thereby reinforcing Sacramento's insistence that spending on student financial aid be counted as part of the calculation of state funding for UC and CSU. 

There are some positive one-time allocations for deferred maintenance and selected programs at the two sectors.  But one time allocations are band-aids.  They do little to address the strain on faculty, staff and students caused by the increases in enrollments during the long decade of reduced state funding.  They do little to address the long-term capital needs of both CSU and UC.   The Governor has gone on record as insisting he doesn't "know what a legacy is."  That's just as well.  In higher education at least it isn't a pretty one.

AFSCME STRIKE MAY 7-9

UC Service and Patient Care workers will be going on strike from Monday May 7 to Wednesday May 9.  AFSCME, the union representing these workers, has been negotiating with UC for over a year with little success and the University had imposed a settlement for the 2017-18 fiscal year.  As the union indicates here the University's latest offer includes pay raises between 2 and 3% (depending on your workplace) combined with a freezing of step increases for 5 years, a rise in health care costs, and a shift to less retirement support.  Given that inflation is now hovering around 2% this can hardly be considered the generous offer the University insists it is.  

To make matters worse, service and patient care workers are already among the lowest paid workers at UC.  As a recent AFSCME Study made clear inequality within UC has been increasing dramatically over the recent past.  UC's lowest paid workers already face difficulties making ends meet.  (26)  This general inequality is compounded by racial and gender inequities that run throughout the UC workforce.

Compounding the issue is UC's continued insistence on its right to sub-contract out its labor needs.  Despite all the fanfare a few years ago about UC's policy of paying $15 an hour to its workers, that promise does not extend consistently to sub-contractors.  As UC expands its use of sub-contractors the living conditions of its lowest paid workers worsens dramatically.  (26-27)

There are a variety of places you can go to find ways to support the strikers:

CA-AAUP has a statement HERE

AFSCME Strike Locations can be found HERE

AFSCME's statement on the negotiations can be found HERE

The AFSCME report on Inequality at UC can be found HERE