Higher Ed Needs an Actual Recovery Plan, Not Wishful Thinking

Neither major party has one, for higher ed or for anything else. Higher ed boards and presidents don't either. (Pictured at left: UC Regents Gareth Elliott, John Pérez, and Sherry Lansing.)  Rebuilding this system is pretty much up to us.

I say this because however universities' operations people struggle to hold fall term together, the larger policy response has lost its grip on the unfolding disaster.  The most vulnerable students are disproportionately dropping out, academic programs are being closed, doctoral programs are being suspended, early-career women faculty's academic futures are put in jeopardy, student enrollments have been further destabilized, and testing and tracing regimes are too uneven to assure general reopening in spring.

There's also higher ed employment. At the Chronicle of Higher Education, Dan Bauman pulled together data on the worst higher ed employment collapse since modern statistics began. Since March 2020, the sector has lost seven percent of its workforce.  Here's the gruesome chart.

The rising employment trend you see largely tracked student enrollment growing by about 25 percent in this period. When Covid hit, most universities hadn't fully recovered from the Great Recession.  Employment during that downturn merely went sideways, rather than going off a cliff.   Now it is going off a cliff.

The minds of policymakers and governing boards have been dulled by promises of a V-shaped recession. Everything is supposed to bounce back when dorms and classrooms re-open.  You can see a small bounce above.

A bounceback in employment requires both political will and money. The two are linked.  In Bauman's other chart, note where the bouncing is not happening.

In spite of all the rhetoric about access and inclusion, politicians are not allocating money to the institutions--largely public--that offer those.  Everyone is concerned about the diversity of the academic pipeline.  Collapsing higher ed employment, much in various kinds of student services, squeezes the pipeline at its most diverse point.   (Private colleges both wealthy and reputable are also suffering: Ithaca College has announced a plan to cut 25 percent of its faculty.)

Lying behind this is the negative role now adopted by state governments. They applied austerity and helped deepen the Great Recession. They are playing the same destructive role again.  Republican state governments are cutting higher ed. But Democratic state governments do the same, with New York and California in the forefront.  In spite of what you hear around UC, the Democratic legislature gave UC's general fund a 12.2 percent cut (details here).

Legislators and governors blame a Covid crash in tax receipts. States are having a terrible tax revenue year:  some expect to lose a fifth or even a third of their budgets (CBPP's State Budget Watch has an appalling chart of estimates state by state.)  But this problem is partially self-inflected. States can raise revenues by raising taxes on people and business that have wealth and income. Covid has been bad for labor and good for capital; bad for lower incomes and okay for higher.  Legislators could pass a solidarity income tax surcharge on high earners. They could pass a Facebook tax, a Google tax, an Apple tax, a Microsoft tax, and especially an Oracle tax; in New York they could pass a Goldman Sachs tax, etc. These would be taxes on the very wealthy and currently prosperous individuals and sectors these companies represent.  But today's Democrats are no more likely to pass even temporary taxes than are Republicans.

What about governing boards?  They are fiduciary authorities, and their job is to maintain the revenues that allow for the full functioning of their institutions.  In California, that means money to pay for non-commodity learning and (always) money-losing research while minimizing the debt of students emerging from a population with Deep South levels of economic inequality and the nation's number one poverty rate (corrected for cost of living), while dealing with Covid losses and added expenses. Instead of taking a $500 million cut, the regents should be pounding the table for a $1-2 billion raise.

(The same goes for senior people in public health, fire fighting, forest and other environmental remediation, disaster relief, housing and community rebuilding--all leading to using the full rainy day fund, raising taxes now to meet actual urgent needs, hiring unemployed people to do all the work of reconstruction, which would massively stimulate economic activity, tax receipts, etc.  Keynes did live and write his books, and he and his heirs are still correct. )

Given the need and the possibility, what happened at the UC Regents meeting? After the budgetary vaguenesses of their July meeting, board chair John Pérez demanded real data in September.  In September, there were if anything fewer data than in July.  UCOP presented a lesson on the 2009 furloughs.  The one bright spot was that it was interpreted to mean that furloughs aren't a magic bullet. The discussion gave the regents the chance to favor steep progressivity in the furloughs that they said they didn't want to impose, and also to oppose layoffs of frontline staff.

Fine, but there was no plan, and also very little data. For example:

There are no numbers attached to any of these very significant problems.  How bad is the total problem?  No one really asked, and UCOP folks didn't really say.  UCOP works to demobilize the regents, and vice versa, and anyone who wants to rally for the cause of proper Covid funding is cast outside the pale.

The low moment in the charade of deep uncertainty was the refusal to admit that the federal bailout is not going to happen, and getting proactive about the fact that the Democratic cut of 12.2% will start in the current year.  I noted in my last budget post that this is really at 20% cut from the regents' fairly modest request of November 2019.  But not a word about the problems this will present to campuses, faculty, staff, and students.

Rather than saying the feds won't save us, pushing the regents to demand a new deal from the state, UCOP continued to suggest the money will come. Dan Mitchell reports that in an October 6th meeting, a regental committee was told that even if they miss the October 15th deadline (a dead certainty), the state may get money later from a Biden administration and pass some on mid-year to UC.  This isn't planning but wishful thinking, and a commercial investor would dump the stock.

In one case, the slide title belied the data.

In fact, August losses increased again. Given the state's erratic Covid suppression, medical center losses may continue to increase.  The regents' asked no questions about this.  The routine is pretty well established: every regents meeting features UCSF Chancellor Sam Hawgood mechanically intoning that UCSF isn't really losing money after all--it has a "positive EBITA." Nobody asks him, given $850 million in med center revenue losses, what the hell he's talking about.  But the effect is to create enough uncertainty to dull the sense of urgency. 

Discussion of borrowing capacity has the same effect. UCOP's Nathan Brostrom noted new bond revenues of $1.5 billion over the summer, plus $10 B in available liquidity in STIP, and, in passing, identified another $5-6 billion in further borrowing capacity.  So UCOP makes the regents feel that cash flow is in very good shape.  Regent Lark Park observed at some length that the legislature has too many problems to give UC more money.  Regent Pérez said that the goal is smoothing losses so that they are spread out over several years.  Between the regents's desire to protect the legislative Democrats from the University, and their desire to avoid responsibility for layoffs, they will support further borrowing and campus cuts spread out over 2-5 years.  UCOP and the Board are locking in years of campus cuts where there is already nothing left to cut, but without ever actually saying so.

Earlier, new president Drake gave a short introductory talk that mentioned good things like rising awareness of systemic racism while never mentioning the budget.  His lack of affect and vague formulations said "caretaker president." I hope I misheard, since pressure tactics are required.

New Senate chair Mary Gauvin committed the Senate to supporting the Green New Deal project developed by UCSD faculty, and said good things about the need for greater mutual support during the pandemic.  She also said nothing about the budget-- or about the shared governance crisis.  All these good projects require money. But nobody would talk about the money.

The effect is a denial of the size of the budget problem.  In August, I detailed the possibility of a 16.6% reduction in 2020-21 revenues from January projections. What data in the September meeting refuted this? There is some good news, like resident student enrollments holding up. But UCOP offered no specific data that could dismantle a middle scenario like mine, much as I would like that to happen. 

Groups like UCOP and the Board of Regents can't fend off the worst because they won't openly plan for it, or even mention it. They can't negotiate a no-cuts budget with the legislature because they don't explain why it's necessary. Much of the damage to public universities after 2008 was self-inflicted.  We are watching the same exact internal leadership failure happening again.  Its first victims will be the lower-income employees and most vulnerable students that Democratic governing boards want to protect. 

The current board--presidential system hasn't worked well for a while. In my next post, I'll suggest a distributed governing system that would do better.