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Thursday, January 10, 2019

Thursday, January 10, 2019

New Governor, New Higher Ed Support?

On the face of it the answer is yes.  New governor Newsom has proposed 6.9 percent and 8.0 percent increases for the University of California and Cal State systems respectively.  This is more than double the typical Jerry Brown increase in a normal year.

The tone of the overall budget is marked by its "California Dream" preface and references to "fresh starts and new beginnings" and various kinds of glory. Its tag line is "California for All."  Expenditures are up 4% over Brown's last budget, with health, education, and antipoverty programs doing well.  I don't have time to check, but I think the California higher education sector has not gotten an increase greater than the budget average since Gov. Gray Davis around 2000, or maybe George Deukmejian Jr. in the 1980s.

The change in tone is dramatic: Newsom is swinging for a pro-immigration Green New Deal mixed with Gov Pat Brown cum George Bailey in It's a Wonderful Life.  I'll take it.  The Brown years were a drag and a grind. Let's blow the doors off and actually get somewhere.

The good news for UC's budget includes basic stuff like acknowledgement that UC's underfunded enrollment went up 19.2 percent from 2010 to 2017, and that additional students need additional money.  Brown liked unfunded enrollment, which got us results like this at UC Riverside.
Newsom's budget also identifies and then increases funding to address critical student issues: hunger and homelessness, undocumented status, mental health challenges, and inadequate advising, among others (49-50).    It also gives $138 million in one-time funding for deferred maintenance, which is more than UCOP's ask.   All this is good news.

But after years of underfunding, the budget also includes shortfalls and bad habits. I'll sort these into four clouds and two traps.

The clouds:
 First, here's the UC budget request for 2019-20 from the Regents meeting in November 2018. 

The state portion of the request (excluding one-time deferred maintenance) is $422.6 million.  Newsom's proposed $240 million is about 57 percent of that total.  (And Note that $40 million of the $240 million is earmarked for graduate medical education).  

Second, Newsom makes the increase contingent on no tuition increase.  I'm in favor--but with state funding to compensate.  Low, flat tuition was great during the boom years that ended during Jerry Brown's first terms in the 1970s. UC extended those higher "master plan" levels of funding by combining lower state funding growth with tuition increases.  This was the "Compact"formula of the mid-2000s under Arnold Schwarzenegger.  But it hasn't maintained quality during years or decades of 2-4 percent increases that just match inflation in the wake of large state cuts.

If UC is going to rely on public rather than private revenue increases, then these will need to be consistently large (in the 10, 12, 16 percent range).  (This overview post provides history and a rebuttal to the claim that UC got fat off tuition increases. Or see the first chart here for UCOP's use of those big numbers.)  Large state increases won't happen without a new public discourse about higher ed in California. That is, a financially healthy UC under flat-tuition Newsom depends on a  cultural shift toward public goods that is just getting started and could be reversed.

Third, Newsom continues Brown's tradition of funding other education retirement plans but not UC's.  As CUCFA's Executive Director Eric Hays points out,
 Newsom is also paying down $3 billion of PERS debt (that currently has $59 billion in unfunded liabilities) and $2.9 billion (over 3 years) of STRS debt (that currently has $104 billion in unfunded liability).  And the state will use Prop 98 money to fund an addition $3 billion (one year) payment into STRS on behalf of the school districts. But Newsom is notably not making a similar payment to help pay down UCRS debt (continuing the state's disparate treatment of UCRS).
This will means a further tens of millions per year out of UC operating funds and a big vulnerability in negotiations.

Fourth, buildings new and old:  the money for deferred maintenance is small relative to the problem, and also one-time.  And the state is not restarting funding for capital projects.  That produces charts like this, for UC Berkeley.

In 2010, the state stopped issuing General Obligation bonds whose proceeds went to UC to build infrastructure.  "Garamendi" Lease Revenue bonds were a kind of stopgap, in that bond repayments were to be made from indirect cost recovery and lease payments rather than from a campus's general funds.  In practice, the campus did cover quite a bit of these bonds from general funds, but in any case they are gone too. "AB 94 Funding" is a euphemism that refers to the legislation that allowed campuses to borrow and pay for buildings with their own money.   Houston, we have a problem. Teaching and research need buildings, and no general revenue source for them.  (No don't say donors!)

Enough of the clouds.  Let's look at the traps.

One is the reduction of higher education to workforce development.  I recently wrote a piece on the seven main fallacies of this vision of colleges and universities, and Newsom is bringing them to life.  One issue is that poor students and students of color are as entitled to personal development and deep learning as wealthy ones; shunting them into job training colleges is discriminatory.  Another is that workforce development favors simple over complex, immediate over long-term, and known over unknown capabilities. These biases lowers educational quality in relation to social needs.  

UCOP loves the workforce argument, and has hitched its funding to a promise to provide 200,000 additional bachelor's degrees to state businesses in the 2020s.  Newsom loves it even more, and has doubled down. Here's the preamble to the Higher Education budget text:   
Higher education is central to training and developing the skilled workforce needed for the state to meet its ever-changing workforce needs and is a core pathway for Californians to improve their upward economic mobility. If colleges and universities are to remain engines of economic mobility, they must evolve along with the state's changing student population. They must provide programs that train for the skills needed not only for today, but for the future economy.
Strengthening the relationship between higher education, workforce development programs and employers will be a key focus of the Administration. The Administration will work to promote affordability, access, and efficiency in higher education.
The three pillars of public higher ed are actually affordability, access, and quality.  That last is mass quality.  It involves quite a bit of equality: students at Cal State Northridge, UC Irvine, Occidental College, and Stanford University should get learning of quality similar enough to avoid caste sorting.

In contrast, efficiency is easiest to get with fewer courses, no prerequisites, easier grading, less instructor response, and more batch processing.  Efficiency is best achieved by lowering quality-- including in the areas of complicated sociocultural knowledge that are going to make the difference in the future.

Trap two: lowered expectations.  The Jerry Brown legacy in higher ed is regression to the mean.  California state systems that had been the models for everyone became more average. Of course the people in these systems fought against that, but we all had to "chose our battles" and we have given up on quite a bit.

Deferred maintenance is a crucial example.  UC is starting to get units of $100 million per year to deal with this.  But the actual need is $3.2 -$5 billion (page 5), and this is not new capital projects (which are about $3 billion a year) but just fixing the existing stuff.  At this rate, it will take between 30 and 50 years to make the repairs we need today.  When an example comes up--like 4 years without meaningful heat in my building at UCSB--people chuckle or shrug and move on.  The unacceptable slowly becomes acceptable, and the new normal is decline.

Newsom seems to hate decline and love ambition.   California higher ed should give it to him.


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