Paris on September 1, 2016    

By Sean L. Malloy, Professor of History and Critical Race and Ethnic Studies (CRES), University of California, Merced

In early August 2025, the Trump administration extended its shakedown of higher education, which had previously focused on elite private universities such as Harvard and Columbia, to target the University of California (UC), the nation’s largest and most prestigious public university system. Beginning with UCLA, the administration froze hundreds of millions of dollars in federal research funding and demanded a $1 billion ransom along with other changes, including an end to gender-affirming care.  In response, the UC has launched a glitzy PR campaign enlisting alumni (including UCLA grad and Lakers legend Kareem Abdul-Jabbar) to make the case for the university while urging Californians to “Stand Up for the UC.”  

 

An Open Letter to University of California President Michael V. Drake and the University of California Board of Regents

Dear President Drake and Members of the UC Board of Regents, 

We write to you today with our backs against the wall. As department chairs and program directors in the most racially diverse college at one of the two most racially diverse campuses in the University of California system, we in UC Riverside’s College of Humanities, Arts, and Social Sciences (CHASS) and our staff and faculty colleagues across UCR have been struggling for years to make ends meet. Already chronically underfunded by the state, UCR was devastated by the budget decisions made by then-President Yudof and the Regents at the height of the Great Recession. We have worked in staggeringly understaffed and underfunded conditions since then. Yet on top of our chronic underfunding by the state, we now face an additional – and permanent – 11 percent budget cut. This is not just unsustainable financially, it is unsupportable on grounds of fairness, equity, and most importantly, of racial justice – pillars of the University of California’s mission. 

UCR’s budget is made up almost entirely of salaries and benefits – in CHASS, the proportion is 98 percent. Thus any permanent budget cut inevitably is a cut in people. We hemorrhaged staff and faculty during the Great Recession, and although we have been able to hire additional faculty in subsequent years, our student population has grown rapidly enough to largely outpace those gains, leaving us severely overcrowded and still struggling to rebuild. Our world-class research university already operates on a shoestring; further cuts would be devastating. For many of us, this pattern of systemic neglect and chronic underfunding of a university serving a student body composed of at least 85 percent students of color is troublingly reminiscent of redlining, the practices consolidated after the Second World War that devastated thriving neighborhoods made up predominantly of people of color. We are writing to implore you to stop the redlining of UCR. 

With roots stretching back to the turn of the twentieth century, UCR has a distinguished history in the UC system. A former agricultural experiment station, UCR was meant to serve as a flagship undergraduate institution in the UC system, serving the Inland region of Southern California. UCR is second only to UC Merced in the percentage of students of color, has one of the highest percentages of Pell grant recipients in the nation, and serves a student body that is well over 50 percent first-generation college students. Yet our increasingly brown and working-class campus has frequently been overlooked or sidelined within the UC system. 

This is not simply a symbolic move; even after a post-recession reconfiguration of the UC system’s distribution of state funds to its campuses, UCR currently receives approximately $8,500 per student, whereas UCLA receives closer to $11,500 and the Berkeley, Davis, Irvine, and San Diego campuses receive $10,000. Yet our student-to-faculty ratio is higher than the UC system average, and our student-to-staff ratio is fully 38% higher. We applaud the recent “re-benching” decision that will bring the funding of UCR and other under-funded campuses to within 95 percent of the systemwide per-student average by 2024. But as with redlined neighborhoods, the damage to UCR’s resources from decades of neglect cannot be reversed simply by bringing our support from the system up to an amount that is only slightly below average rather than grossly below average, nor will the phased-in implementation of this plan help us avoid devastation in the present moment. We were facing an 11 percent budget cut before the announcement of the re-benching; we are facing the same budget cut after its announcement, because rebenching is not enough. 

It takes more funding, not less, to create an educational environment in which first-generation college students and students of color can thrive. UCR has been lauded for closing the gap in graduation rates between white students and students of color, and for the past two years US News and World Report has ranked us the top US university for social mobility. We have an internationally renowned faculty that includes two Nobel Laureates, close to fifty Fulbright and National Endowment for the Humanities Fellows, and nineteen Guggenheim Fellows. But in addition to being highly accomplished researchers, scholars, and artists, our faculty are something more: many of us came to and have remained at UCR because of our deep commitment to serving first-generation and BIPOC (Black, Indigenous, and people of color) students. UCR educates Californians – 96 percent of our students are California residents – and in return, because we do not expand our budget with out-of-state tuition, we suffer. Were all UC campuses facing the same dire circumstances, we would weather the storm shoulder-to-shoulder with them. Instead, we are being left out in the cold yet again: when many colleges at other UC campuses are losing only two to three percent of their budgets, we are facing the stark decisions demanded by an 11 percent permanent budget cut. This abandonment by the President’s office and the Board of Regents is a demoralizing example of structural racism. 

For nearly a year, we have all witnessed the disproportionate impact of both COVID-19 and the pandemic-induced recession on BIPOC communities, some of them the same communities devastated by redlining and nearly destroyed by the Great Recession. Communities subjected to decades and, in many cases, centuries of systemic racism have few of the resources that have helped many white communities to remain safe and financially solvent during this crisis. Systematically deprived of resources through decades of neglect, our campus – with one of the brownest and poorest student bodies in the entire UC system – is facing economic devastation. How will staff who already do the work of two people take on more, if we have to cut our staffing even further? How will departments that are already stretched to breaking stretch further? Should we increase our teaching load even more, and destroy the stellar educational system we have built in favor of an impersonal factory model? Should we turn away from our research and creative production and deprive our students of the cutting-edge insights and opportunities afforded by a world-class faculty? With a globally engaged student body, should we meekly accept the elimination of UCR from the UCDC program and others like it? The UC system clearly believes that students at other UC campuses deserve these opportunities; are our students any less deserving? 

The correlation is glaring between the fact that we serve one of the highest numbers of BIPOC students in the system, the historic lack of systemwide investment in our campus, and the offer of a solution that brings the UC system’s support of us to less far below average over the course of the next several years. In a time of long-overdue attention to the destruction wreaked by systemic racism in the US, it should finally be clear that UCR’s students deserve a fully equal investment from the UC system, including support to correct for years of economic marginalization. It’s time to stop redlining UCR. 

Respectfully, 

Juliann Emmons Allison, Director, Global Studies

Sheila Bergman, Executive Director, UCR ARTS

Heidi Brayman, Director, Liberal Studies

Rogerio Budasz, Chair, Department of Music

Edward T. Chang, Director, Young Oak Kim Center for Korean American Studies Christopher K. Chase-Dunn, Director, Institute for Research on World-Systems Walter A. Clark, Director, Center for Iberian and Latin American Music Derick A. Fay, Acting Chair, Department of Anthropology

Tod Goldberg, Program Director, Low Residency MFA in Creative Writing & Writing for the Performing Arts

Weihsin Gui, Director, Southeast Asian Studies Program

Sherine Hafez, Chair, Department of Gender and Sexuality Studies

Steven M. Helfand, Chair, Department of Economics

Rickerby Hinds, Chair, Department of Theater, Film, and Digital Production Tamara C. Ho, Director, California Center for Native Nations

Matthew King, Director, Asian Studies Program

Jacques Lezra, Chair, Department of Hispanic Studies

David Lloyd, Chair, Department of English

Tom Lutz, Chair, Department of Creative Writing

John N. Medearis, Chair, Department of Political Science

Yunhee Min, Chair, Department of Art

Jennifer R. Nájera, Chair, Department of Ethnic Studies

Daniel Ozer, Chair, Department of Psychology

Andrews Reath, Chair, Department of Philosophy

Ellen Reese, Co-Chair, Department of Sociology and Chair of Labor Studies Judith Rodenbeck, Chair, Department of Media and Cultural Studies

Jeff Sacks, Chair, Department of Comparative Literature and Languages Michele Salzman, Chair, Department of History

Joel Mejia Smith, Chair, Department of Dance

Glenn Stanley, Co-chair, Department of Sociology

Jason Weems, Chair, Department of the History of Art

Melissa M. Wilcox, Chair, Department of Religious Studies 

While UC campuses weighed current-year budget cuts in the range of 6 to 15 percent, the Board of Regents contemplated a vision of equilibrium. When the UC Office of the President's November presentation was done, a regent invited chancellors to respond. UC Riverside's Kim Wilcox (at left, perhaps showing the size of his budget gap) started a courteous series of dissents from the junior campuses, with a timely assist from Berkeley's Carol Christ. Wilcox was featured in Teresa Watanabe's LA Times story that covered the disconnect between celebrating UC's racial diversity (done) and actually funding it (not). The effects of cuts are swaddled in confusion, a confusion seeded by UCOP's budget narrative and planted in the fertile soil of the regents' modest knowledge of their university.

1. UCOP

Each November, UCOP proposes a budget to the Board of Regents for the following fiscal year. In November 2020, they proposed a budget for 2021-22, which the regents then voted unanimously to approve. The result becomes the University's official budget request to the governor and the legislature. 

Here's the summary attachment of the request. Noteworthy items include the request for a full restoration of the state legislature's cut to UC's 2020-21 budget of about $300 million, a second year of pay freezes for faculty and most unrepresented staff (merit increases are funded), and a 1.5% wage increase for a category of non unionized frontline staff.

The dominant narrative is . . . a balanced budget! (Same for Finance and Capital Strategies.) Each item is an increment on an invisible base. Nearly all the items are personnel costs, in keeping with the perennial narrative element that workers are the cost albatross around the university's neck.  The failure of the state to fund capital projects is given the artificially minute price tag of $15 million (debt service).  The exception is deferred maintenance, featured as mostly an investment in cost savings, and expressed as a one-time sum, with no definition of total need (likely 100 times larger) or notice that DM is in fact the opposite of a one-time thing, by its very nature. The request for a state funding increase ($217.4 million, oddly parceled into four items) is not defined as a percentage of a general fund base or as a response to specified campus conditions. The amounts are very small, and have no obvious connection to the mass of current operations.

The budget document (B4) was presented to the regents by the two budget officials who do these honors at regular two month intervals, Nathan Brostrom and David Alcocer. They are both highly competent people who are genuinely devoted to the wellbeing of UC: my comments are not about the individuals but the narrative.  The presentation began about 2'15" into the last session (bottom video on this page; perma-archive of audio is here).  UCOP framed the current year cuts with a full "V-shaped" recovery.

The shortfall is minimized as "near-time," even though these non-core operations are, on campuses, forcing cuts to the educational core.  The term "bridging strategies" suggests losses have been contained, the further implication being no damage to the workforce and no need for better state funding support. As we have often noted in this space, the virtue signaling of self-reliance lets the state off the budget hook.

In presenting this slide, Brostrom noted the campuses have different shortfalls and different strategies for filling them.  This slide looks at the system aggregate.

The main message is, again, the balanced budget. The state cut UC $300 million in the middle of a pandemic when it was losing $2.2 billion in revenue and incurring an additional $431 million in Covid-19 expenses. This reality disappears.  In the UCOP story, cuts don't really matter because the cuts were made up with a bunch of harmless-sounding stuff, like attrition and using reserves. 

Same thing for next year.

The state's cut to UC funding is permanent, so it shows up again. The current year's cost increases do too--so they apparently weren't actually covered as shown in the previous slide.  There are some new "savings." These are really self-imposed cuts: the 10-year UCPath fiasco (a systemwide personnel transactions platform), in which IT "efficiencies" have really meant "morale-crushing rigidity and huge new costs," should have ended UCOP's annual invocation of such savings. But the regents don't seem to know operations realities like UCPath's impacts on staff, so there they are again.  Non-resident student tuition is assigned a full bounce back, and the rest is supplied by restored state funding (though Brostrom noted verbally that this would be "one-time"). It all adds up to the standard budget narrative of equilibrium.  

In reality, it doesn't.  It adds up to cuts on every campus, and a scramble to maximize alternative revenue streams that, in another unstated problem, move workforce effort away from the state-funded educational core.  The actuality of cuts surfaced briefly when the opening regental questioner, Michael Cohen, said about the phrase "cost savings" that "I think you probably grabbed a sentence from some prior documents from the last decade or so," and then asked what long-term savings they mean. Brostrom noted that NRST is capped now, and new high-tuition programs are already in wide use. Translation: the budget patches of the 2010s are now used up. In fact, that leaves workforce cuts, delicately phrased as "attrition and others."  (Cohen also got Brostom to move the number for reserves on the core budget from $174 million to $2 billion, although the issue died there.) In short, "cost savings" mainly means "workforce cuts."

Before we get to the Riverside dissent, let's tote up the core budget story elements:

1. Budget cuts happen, but they never cut UC's world-leading excellence.
2. UCOP cannot stop these budget cuts, but has already neutralized them.
3. All fund sources are basically the same: private is as good as public; borrowing is as viable as state funding.
4. The burdensome costs are personnel (not capital projects, deferred maintenance, or internal subsidies for sponsored research).
5. Campus budgets have inherent differences that the campuses are handling differently.

November brought the latest installment of the "wait and see" policy advanced in every budget presentation during the 2020 Covid period. Covid will fade, and the business cycle will bring UC back to normal. In this story, no new framing, no new thinking, no new policies, no new advocacy, no new mobilization is needed. 

2. The Chancellors

Cohen's question was followed by one from Lark Park, who noted that the system budget doesn't always reflect the campuses and asked if one or two chancellors would like to speak. Enter UC Riverside's chancellor Wilcox.

A lot of people have talked about the pandemic as a magnifier of differences. . . . It's true that we haven't raised resident tuition in many years. And we are a campus that is almost exclusively resident students. That part of our budget has been fixed for many years. . . .And of course that's in the face of the same kind of cost increases that everyone else has faced.  This has been a serious challenge for us at Riverside. To give you an idea, we have now people on campus suggesting that we eliminate the entire athletics program, shut down the study abroad program, our UCDC participation, and our UC Sacramento participation. And that's simply so we can preserve the dollars so we can maintain the core of the university. And ironically the last three . . . are because of our low participation rate, which, ironically, is because our students have fewer resources to participate. So for us, this is a dire situation. There are 6 FTE employed in the chancellor's office at UC Riverside.  I'm one of those six. We anticipate next year there will be 4.  We're cutting everything we can to manage this budget situation. While I appreciate the perspective of Nathan and David on the total being balanceable, the impact on the ground is significant. (2'44'':45 - 2'46":30)

Two other junior campus chancellors backed Wilcox. Juan Sánchez Muñoz at Merced added that his local community depends on campus services that are being curtailed. Cynthia Larive at Santa Cruz noted the added burden of the very high cost of housing in that coastal location. Finally, Berkeley's Carol Christ chimed it to say that although Berkeley's budget is completely different from that of the younger, smaller campuses, "this is the most severe crisis I've ever experienced in my career in higher education. It is a really challenging crisis for the campus.  . . .We have a deficit measured from March 2020 through June 2021 of 340 million dollars." She described a few sources and added, "our losses in athletics are catastrophic."  While there are differences around the UC system, she concluded, "it's not a question of not having budgetary duress on the campuses." (2'55" - 2'56")

The regents' responses made it clear that they do not know what Covid costs and losses plus state cuts are doing to the the campuses. At the end, Regent George Kieffer said, "if we maybe think about a working group, a smaller group, to understand how the process works within UCOP. . . [Formulas for campus allocations] are something I think that the regents have not understood--that I have not understood for most of my term."  Kieffer is the immediate past chair of the Board of Regents.  This admission suggests that the vast majority of the governing board has no real idea of how budgeting works or affects the campuses over which they have complete fiduciary responsibility and control. 

A remarkable summation of the board's competence came from Park, speaking between Wilcox and the other chancellors.

Chancellor Wilcox I appreciate your candor on this. I know it can't be easy. I am surprised to hear this news, but I guess maybe in some ways I shouldn't be. There was a speaker in public comment this morning who alluded to the per-pupil funding disparities. [At the presidential search town hall at Riverside], we did hear an earful from faculty at the time, about how they felt undervalued in terms of per-pupil funding.  I guess I'm kind of taken aback by this. It's kind of ironic because I remember a presentation you gave, this time last year even, we heard about all that Riverside has achieved. And if we could just tell the Riverside story and the Merced story, it would be tremendous and we'd just get so much state support--in terms of the kind of students we're trying to support. I'm really worried that we are doing a real disservice here. And it worries me--I think that rather than advancing our interests on equity we're actually impeding it when we let the disparity continue to exist. I guess I should look to myself too--I've heard this and I've seen the numbers, but it just hasn't struck me as much. I do know it's tough times across the board because of Covid. But just as we know that some populations are struggling more than others in the real world here, I think that if we don't come to grips with this, we're not serving the system well. I think we need to figure out whether our formula advantages the already advantaged, which is something that goes against a lot of principles we've stated in the last year when we've done away with SAT when we endorsed Prop 209  [sic]. I just think we need to go beyond this veneer, to get at what equity really means. . . . I appreciate your being candid with us and I appreciate the speaker who spoke in public comment. It reminded me of what we heard in Riverside.  I just would like to see this discussion continued in the very near future. I think we have to solve it. I think we have to decide that we want to do more than talk about equity, that we want to put our money where our mouth is. (2'47" - 2'50")

Of course Park is right: the regents have been giving lip service to racial equity and inclusion because they have never bothered to insure that equity was budgeted. They seem not to study before the meetings, nor do they appear to read widely and think independently about systemic issues, even those overlapping with their expertise in finance, construction, and the like. The information is widely available. The Senate's UCPB produced a version of the campus funding disparities chart (via UCSD professor Andrew Dickson) around 2006.  The Santa Cruz chancellor's office injected a similar chart into budget negotiations with UCOP in 2009-10. A state audit thoroughly investigated the situation in 2011, and here at the blog we did a detailed, two-part post on the racialized funding inequities (2011-12; Part 2).  The Riverside campus hosts leading scholars of US and educational racism, structural and otherwise; one of these is Dylan Rodriguez, current president of the American Studies Association and immediate past chair of Riverside's divisional senate. The immediate past chair of Riverside's Council for Planning and Budget, physics professor Harry Tom, could produce an eloquent, comprehensive campus budget summary with an hour's notice. A former president of the Council of UC Faculty Associations, Pat Morton, teaches at Riverside. The current systemwide Senate chair, Mary Gauvin, teaches at Riverside, and was at the regents' budget presentation. And so on.  The information is out there for the regents to find: it's just not found for them by UCOP.   Unfortunately, this "disengagement compact" at the top of UC has hurt 21st century UC students, particularly the very high share of disadvantaged students that are relegated to the poorest campuses.

Chair Pérez concluded item B4 by saying, "I did hear very clearly a desire from regents to dig down, and get a more granular view of the budget, so I will work with the president's office to figure out how we can achieve that."  The regents almost made it a full 50-minute hour on the UC budget proposal for 2020-21 (2'15"-3'03"). With some collective effort, it could be a turning point.

3. The Story

Here are some key elements of the better budget narrative that UC and other public universities desperately need.

A. Big picture context: In contrast to current practice, each budget proposal must be compared to the previous regental request (November 2020 to November 2019).  (November 2019's B4 was a better presentation because it included metrics that nearly touched the third rail of UC politics: budget-driven quality declines.)  The year-on-year pattern should then be put in historical context.  Here's an example from our "essential charts" post in May.

The state underfunds UC (red line) compared to the state personal income benchmark (blue line), and falls dramatically short of funding that tracked both income and enrollment growth (yellow line). State government has been saving money on the UC system for 20 years, and the regents can't see sub-standard campus resources without this context.  

In addition, the inadequate net revenues from past tuition hikes and the terrible effects of new unfunded costs need to be factored in to grasp net per-student funding. UCOP could produce a more authoritative version of this effort:

In the calculation, net educational revenues (green line) follow the clearly inadequate state funding (red line), not higher gross figures the regents see (details are at the post linked above). This is a very bad situation that is redefining the quality and nature of UC. It of course won't be fixed until it is faced.

B. Tie budgeting directly to its effects on policy priorities.  Today's board is rightly obsessed with racial equity and inclusion. It's fairly easy to show a prima facie racist correlation in state funding for UC (from our "First Black President" post).

This should be used to shame the legislature out of its practice of giving half the per-student funding to today's minority-majority UC that it gave to white UC. 

C. Clearly explain funding allocations to the campuses, including "rebenching." 

Here's a down payment on an explanation the regents need to have. Rebenching was UC's response to a state audit back in 2011. The audit identified funding inequities that it set forth as racialized ("Racial Patterns of Campus Budget Inequality").  Not only had UCOP allowed campuses to keep all their non-resident student tuition, which "advantaged the already advantaged," to cite Regent Park, but was giving less state general funding to the newer (and browner) campuses.  The plan was to increase the average per-student allocation to the highest level (UCLA's) with new money.  It took about six years, and here's the theory of what happened. 

Here UCOP has told the regents that the campuses now live in budgetary equality. So why was Riverside Chancellor Wilcox saying his campus gets the least money per student?  

Because of how rebenching actually worked.  Rebenching carved out some kinds of campus specific state earmarks and gave each campus a fixed base, so not all state funding was rebenched. Secondly, students were weighted by type, with doctoral students counting 2.5. For example, UC Berkeley had 41,891 students (headcount) at a census point in 2017-18. But it has a high share of doctoral students, so its "weighted" enrollment was 49,894. Berkeley gets the same rate of $6000 and odd per student, but for 8,003 students more than it physically has. Riverside moves from 23,279 unweighted to 26,338 weighted, or an increase of 3059. Berkeley's increase is 19 percent relative to its unweighted base; Riverside's is 13 percent.    This in keeping with the other features of the formula leads to "advantaging those already advantaged."

A final factor is that only a campus's enrollments at the start of the rebenching period were actually rebenched. (I am inferring this from the fact that I was not able to reproduce the UCOP chart above, and got an approximation only by holding enrollment constant.) Sometime during this period, UCOP decided to accept a "surge" of resident students to compensate for the political liability that high non-resident enrollments had created. New resident undergraduates were given whatever amount was cooked up in a Brown-Napolitano deal in a given year ($5000 one year, $0 in another, etc.). Here's actual (weighted) enrollments look like:

No convergence. Flat funding. And Riverside bumping along the bottom. (I assume UCSB did better because it grew less in this period.) The surge's underfunded resident undergrads were the price UC paid for rapid non-resident tuition growth, meaning that campuses like Riverside paid for NRST revenues at campuses like Berkeley.

Each campus experiences its educational quality through total available revenues. Adding tuition (including the non-resident tuition and for-profit masters programs (SSPs) at 3x resident rates to state funding looks like this:

This confirms Wilcox's claim that Riverside has the least revenues per student. UCOP in effect is sending poorer (and mostly URM) students to the poorest campus in defiance of UC's professed values, to say nothing of standards of educational and social effectiveness.   You can also see here the chronic problem of "Two UC Systems," separate and unequal, which the enrollment surge intensified.

D. Tell the budget stories from the bottom up.  Wilcox disrupted budget orthodoxy by talking about his campus for 105 seconds.  The other chancellors spoke for around 60 seconds each.  These vignettes changed the Board's budget perceptions, at least temporarily. They could and should be multiplied a thousand-fold and turned into coherent stories.  Faculty, staff, and students could create a different master narrative by laying out what is happening in classrooms, grad student cubicles, libraries, and laboratories. It would fundamentally change budget perceptions, and also, over time, public understanding and budget politics in a bewieldered state. 

Many other people need to tell their alternative budget stories. You other people. All kinds of campus people. Neither the regents nor UCOP can or will do this on their own.  They don't know enough, and they aren't correctly placed.  You actually do know enough.  This knowledge can overcome the current stumbling blocks: top-down governance, and the absence of a UC opposition party to put forth a New Budget platform for UC.  The Senate hasn't done it. CUCFA hasn't done it.  Even AFSCME, whose Claudia Preparata has done the best independent analysis of UC reserves, hasn't done it.  The pieces of alternatives are a good start but aren't enough. Individual work can always be marginalized in the time-honored UC tradition of shunning the messenger and ignoring the message.  (Even tenured faculty fear shunning, since it makes them feel devalued and also blocks the possibility of an administrative appointment that, during decades of sub-par salaries, is the main way to get a significant raise.) A complete rebuilding of a broken budget model is too important to keep delaying the day regular campus folks start pooling their experiences, saying the way things ought to be, building the story line, and detailing how to fund it.

Warmest congratulations for getting to the end of 2020.  Happy 2021 to one and all.

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.

That may be my worst title ever but it's an important point.  So here we go. 

Where are university budgets near the end of our bad policy summer?  In a bad place -- a worse place than seemed likely during the weeks of activist government from mid-March to mid-May. In this post, I'll discuss the national issue, describe a flawed university budget discourse that makes universities more vulnerable, and link this to the failure of today's mainstream Democrats to accept the economic role of government.

The federal CARES Act was signed on March 27th, and sent universities $14 billion of the $46.6 billion they'd requested (with half of that going directly to students). Having gotten 1/6th of their stated need, higher ed advocates placed their hopes in a follow-up HEROES Act passed the House on May 15th, which Mitch McConnell, Senate Majority Leader, sat on throughout the summer.  Thus the nation's schools and colleges planned for fall in a state of deep uncertainty and growing dread.

This past weekend, POTUS signed executive orders (mostly "memoranda") mandating supplemental unemployment benefits at $300 rather than CARES's $600 per week, with another $100 to come from the states. He extended student loan forbearance from September 30 to the end of the year.  Even if these orders go into effect, there are no provisions for supplemental funding for education at any level, including nothing for the K-12 systems that POTUS and his Department of Education secretary have been trying to bully into opening.  If the states are forced to pay part of the federal unemployment supplement, which some say they can't, that will mean even bigger state cuts to education.

The American Council on Education has a helpful summary of the current situation:

There are technically three bills under discussion in the COVID-19 emergency aid negotiations. The first bill is the HEROES Act written by House Democrats and approved by the full House two months ago. The second is the HEALS Act, which represents the ideas of Senate Republicans and the White House. Finally, the Coronavirus Childcare and Education Relief Act (CCCERA) is legislation introduced by Sens. Chuck Schumer (D-NY) and Patty Murray (D-WA) that reflects Senate Democrats' ideas about education spending in response to the pandemic. . . . The bills all include emergency aid for students and institutions, but the levels of funding proposed differ greatly. ACE has estimated that institutions have a total of $46.6 billion in increased student financial need and lost revenues, and will spend at least $73.8 billion on new expenditures to reopen in light of the COVID-19 pandemic. While CCCERA provides a total of $132 billion to meet these needs, the $37 billion provided for higher education in HEROES and the $29 billion provided in HEALS fall far short. 

The federal bill that comes closest to meeting actual higher ed need--at $132 billion--has no chance of passing McConnell's Senate.

Republican control of key governing bodies has artificially induced massive state failure in suppressing SARS-CoV-2.  The U.S. has the worst Covid-19 suppression record in the wealthy world, and, by failing to build public health infrastructure (see Jeneen Interlandi's superb overview), will continue to inflict massive suffering, disparately along lines of race and class, in all of the areas where common life should offer equal treatment, including education.  The failure of public infrastructure is damaging the private economy that Republican-driven premature opening was trying to protect. Republican opposition to a new stimulus increases the odds of a new depression (see Hiltzik and Krugman for summaries). 

Operating on this familiar political landscape, it's hard for people to maintain transformative ambition.  I sketched one version at the end of April ("Our Converging Crises III"), which involved massive public spending for full Covid-19 suppression, full employment, and educational experimentation. The American self-conception is of a nation that leads the world into a better future. The reality, given our decrepit social infrastructure, is a vast majority focused entirely on getting by. 

The Real Covid Budget Crisis

The same is true in higher education. There's been no follow-up on the early burst of federal effort,  and higher ed is engaged in a new round of austerity, translated as operations cuts, layoffs, and program downsizing. The Cal State system threw in the towel early, announcing on May 12th that it would be all-online.  This was at a time when most administrations assumed Covid-19 would be well in hand by fall; Cal State's Chancellor Timothy White could see pretty clearly that they didn't have the extra billion they needed for testing, tracing, isolating, cleaning, tent classrooms, and the rest. Since then, reopening plans have gone into full reverse, including at wealthy private institutions like Princeton and Johns Hopkins whose core value is small-scale face-to-face learning.  

University of California campuses are quietly joining Cal State's closures on a case-by-case basis.  Berkeley announced all-online on July 21st.  The other semester campus, UC Merced, will open August 26th with an unspecified ratio of remote and in-person. Among quarter campuses, which start a month later, UCLA has dropped its in-person proportion from the 15-20% announced in June to 8%.  UCSB hasn't officially updated its mid-June description of fall quarter as "some face-to-face," but is heading toward basically closed. UC Irvine is keeping its students in the "most classes will start remotely" twilight zone.  All sorts of intensive planning is going on behind the scenes.  And so are planning for budget cuts when UC needs that same extra billion that Cal State needed to open safely.

Although dominated by liberal Democrats, the California state legislature put stable CSU and UC funding in the hands of Mitch McConnell at at time when he was already holding it hostage.  In the final state budget, UC will get a 5% increase over 2019-20 if and only if California gets $14 billion in federal stimulus.  If there's no stimulus, UC gets what UCOP calls an 8% cut from 2019-20.  

In addition, the permanent state budget is cut either way: the federal stimulus money will be treated as a one-time backfill on the state cut.  Even that was a bizarre combination of "augmentations totaling $212.9 million and reductions totaling $471.6 million." Rather than offering higher ed affirmation and stability during the pandemic, the legislature provided a changing combination of cuts and increases that, without an unlikely Senate backfill, gives UC and CSU a major cut.

How big a cut, actually?  The legislature reduced the state allocation for UC from $3.938 billion in 2019-20 to $3.466 billion in 2020-21.   This is a year-on-year reduction of 12.2%.  Its a Covid cut of a size that a red-state legislature could brag about.

It's worth remembering all the way back to November 2019, when The Regents requested an increase of $422.1M in overall state funding, which would have brought state general funding to $4.360B (see the slide here minus $25M for the Riverside School of Medicine).  Annual base cost increases at UC are a bit more than 5%, and since that's 5% on less than half the revenues of the core budget, which comes mostly from (long-frozen) tuition, 5% state increases put core funding further behind.  Campuses have tirelessly tried all sorts of revenue workarounds, mostly involving overenrollment coupled with non-resident student growth, but it hasn't worked. (For the resulting long-term austerity, see "Three Essential Charts"). On top of its rather brutalist history, the California legislature now proposes to cut UC by $903.5M from its November request--barring a McConnell conversion like Saul's on the road to Damascus. The is a cut of 20.7% from the Regents's November request.  

Remember too that even had that $903.5 million November increase been enacted, many campuses were projecting deficits in 2020-21 or the following year. That was not a luxury budget. To repeat: because of prior cuts by Govs. Schwarzenegger and Brown, years of tuition freezes, and sub-inflation state growth, the non-miracle state budget cut that now looks likely is a 20.7% cut from pre-Covid's home for UC semi-solvency.

This would be a disaster for UC (and CSU). And it's likely enough to be treated explicitly in plans for both budgeting and the University's political engagements.

Budget Idealism at the UC Regents

This brings is to the July 30th UC Regents meeting. The Regents have absolute authority over budgeting, revenue strategies like borrowing, as well as political advocacy. If alerted to a budgetary emergency, the Regents might be expected to instruct UCOP to mount a massive siege of Sacramento and Washington D.C., pulling in their contacts in the tech community as well as in national politics.  But UCOP's budget presentation (see the July 30 afternoon session at the bottom of this page), rather than rallying the Regents, kept the real dangers behind the curtain. And Regental behavior encouraged this concealment. 

UCOP presented the budget as in basically good shape.  Medical losses for March-June 2020 are $1.7 billon rather than the earlier projection of $2.8 billion.  UC Health VP Carrie Byington had already suggested that the med centers have learned so much about Covid treatment that they won't repeat spring's revenue losses during the current and future infection spikes. 

Undergrad enrollments are "looking very strong," in the words of associate budget VP David Alcocer (11'47"). He said the same was true of international enrollments, in spite of a very turbulent policy picture on top of Covid travel problems.  He basically claimed that enrollment targets would be hit no matter what. I'm also a bit of an optimist on enrollments because I'm a pessimist on the economy: even remote-college looks good compared to a nonexistent job market.  Polling data suggest we're both wrong, and that colleges should expect a growing enrollment melt.

The presentation noted that housing and dining revenues will be down, but UCOP did not quantify or tie these to different durations of Covid-related reductions. A bit later, UCLA chancellor Block offered some campus numbers, and in later questions a couple of Regents clarified that only single rooms will be offered in the fall, though without revenue numbers for system losses. New VP for Research and Innovation, Teresa Maldonado, gave a candid appraisal of major disruption to research, UC's distinguishing educational activity. She was particularly direct on the damage to women and early-career researchers. But this remained a matter of delayed research progress more than a fiscal crisis.

The presentation of the state budget was a delicate matter (starting around 7'40"; I'm not following UCOP slide order). Alcocer explained the numbers in the slide below (they are different from my calculations above). He noted that the final July budget has a better upside than the May Revise and a smaller potential downside. 

He then went on to explain his right-hand column. He noted that "there's a lot of uncertainty here" because the range of outcomes is nearly half a billion dollars, or 5% of the core budget (9'20").  I can attest that the uncertainty has created in campus planning a somewhat toxic mixture of paralysis, wishful thinking, gloom, and fatalism about cuts. Uncertainty is actually encouraging austerity by making the early stages seem very mild.  

But Alcocer's statement about uncertainty incurred an interruption from Chair John Pérez, who said, 

I just want to push back on the way we characterize this uncertainty. And here's why. The way this reads to me, in simple terms, is "uncertainty is bad, and smaller uncertainty is better than greater uncertainty." When in fact the final budget, in both the worst-case scenario and the best-case scenario, are better for the University, than the May Revise. . .  "Uncertainty" is inherently a bad term, so if we want to look at "range"--some other way to characterize it--because we don't want a negative connotation to the spread we see in the final budget, when in fact it serves us better than the May Revise does."

This intervention forced Alcocer to repeat what he had said two minutes before, which was that the upside was better in July than in May. It suggested to me that Pérez has no idea how uncertainty is weakening the campuses. It also suggested that he would not tolerate university officials criticizing the state legislature in even a polite and indirect way. Any campaign to get a reliably flat budget from the state (not conditioned on McConnell's conversion to St. Mitch), or an increased budget that could cover Covid costs, would never get off the drawing board under Pérez.

The misty aura of fiscal stability was punctured only by Berkeley chancellor Carol Christ, who projected a $340M deficit through fiscal 2021 (or more than ten percent of the campus's $3 billion or so in annual revenues).  She read a version of her administration's July 15th statement, and stressed the dependence of the campus on tuition and state revenues. She stated that the latter were $100M below their 2008 level even though the campus enrolls 8200 more students today.  

If the Regents had paused to take that in, they'd get a glimpse of the system's deep structural woes. Berkeley is historically wealthier per student than any campus except UCLA, so a responsible Board might wonder what its woes say about the rest of the system.  This was the only time in living memory that a Berkeley chancellor has said point blank that privatization doesn't work and thus we need good state support. Actually Christ didn't say that, but she came closer than ever before to noting that the problem isn't just Covid but a flawed business model in which the University has let state funding massively decline.

Later, as Alcocer was about to move to UCLA chancellor Block for a campus view of losses in auxiliaries, Board chair Pérez interrupted to complain about how long the budget presentations were taking.  "This was identified as a thirty minute discussion. . . . when an item is 30 minutes, the presentation is no more than half of that. We've now exceeded 35 minutes, before we've gotten a single Regent engaged in discussion." (32'30"). The obvious remedy would be to allocate more than a half-hour to analyzing what may be most important fiscal crisis in the University's history.  The time overrun was entirely due to letting three chancellors say a few words about their campus finances outside of the UCOP PowerPoint story.  Things got even more rushed after that--and even more superficial.  

In questions, terribly delayed to minute 38, Regent Makarichian performed his solo role of asking for budget numbers, and guessed at overall losses by adding some numbers in his head.  Pérez instructed CFO Brostrom to have those figures in the September meeting. I know Brostrom had versions he could have produced then, but who would dare try the Pérezian patience by pulling up another slide?  

In the meantime, UC is covering its losses with borrowing. It floated a bond for $2.8 billion in July, with $1.5 billion in "working capital" and the rest for capital projects. (UC debt has doubled in a decade from around $10 billion in 2009-10  to $24.6 billion in 2018-19). The budget discussion ended with a hopeful wait-and-see good-case scenario which, as I've said, is translated on the campuses as cuts.  

A Plausible Scenario for 2020-21

The Office of the President and the campuses are all doing projections, so I'm going to adjust some internal UC numbers to draft a plausible negative scenario.  This is not a good case, but it's not a worst-case: for example, I optimistically assume that students who can enroll do enroll, and that all are willing to pay full tuition for mostly remote instruction.  The nicer scenarios assume a return to mostly-normal after the fall term. Based on our country's failed-state approach to Covid suppression, I assume that full fall impacts last through the end of Spring 2021.  I use the governor's January budget as a base for state funding, which was $220M less than the Regents' November budget.

The assumptions:

• Tuition: full undergraduate enrollment.  Though 75% of admitted international students do not enroll, many are replaced by domestic non-resident and resident students. Waitlists and "appeal" lists are liberally used, maintaining overall totals.
• Housing is converted to singles, and dining does not return to normal, costing campuses 70% of normal revenues.
• Grad student enrollment. This falls 15%, slowing research, but it has little impact on revenues as campuses simply eliminate sections as necessary in remote courses, while canceled grad seminars free up some faculty to teach more undergraduates.
• Research continues to be affected by outbreaks made worse by shortages of tracing and isolation programs.
• Philanthropy is reduced by renewed turbulence in the markets, as is UC investment income.
• Medical center and clinical revenues recover from spring 2020 levels but don't get back to normal.
• The Republicans block higher ed stimulus funding in the Senate. Although the Democrats win back the Senate in November, President Biden wishes to govern from the center, and decides not to antagonize the 48 remaining Republicans by giving too much help to education.  Like public universities everywhere,UC goes to its lower permanent state funding base.

Here's a rough estimate of what this would look like by standard budget category.

Scenario B Budget Category	Decline $Millions	Negative % Change
2020-21 Base	39,738
Student Tuition and Fees	775	14
Auxiliary Enterprises	1165	61
Research Contracts & Grants	779	12
Philanthropy & Investment Income	555	19
Medical Centers	2279	15
Educational Activities (esp Clinical Rev)	521	12
State General Fund Appropriation	481	12
Total Losses	6555	16.6
Projected 2020-21 UC Revenues	32,823

Scenario B is a decent guess at one possible program for 2020-21: 17% revenue declines for the UC system overall, and 12% or so for the educational core.  Cuts like these would cause major damage to teaching and research, and of course prevent meaningful Covid-19 suppression.  If two things happen, first, Covid illness persists for several years, as some medical officials predict, and second, U.S. politics allows economic decline, then UC, like other universities, will be permanently downgraded.

The Governance Problem

The Republicans are obviously the biggest problem, but so are Democrats and their governing boards.  The Republican donor base sees government as a potentially victorious competitor to business and finance in economic management (through equitable tax policy and regulation but also better social infrastructure and more productive investment).  Weak government has enabled today's "plutonomy." Republican politicians logically oppose programs that will make government useful, effective, and popular and thus empower their direct rival.

But Democrats are also a problem when they reject both strong and weak Keynesianism.  In the strong version, public agencies spend massively to reconstruct society on the principle of equal treatment. This would fund a Green New Deal in which, for example, some of our tens of millions of unemployed people would be paid by the government to insulate the country's housing stock, starting with those owned by low-income people. I pointed towards this kind of spending in an April post.  Let's call it democratic-socialist Keynesianism, Sanders and AOC-style.  

There's also weak Keynesianism, a very useful combination of FDR and LBJ, in which public agencies spend massive amounts to keep an unjust and unequal status quo economy from imploding.  That would include the common-sense goal of keeping the education sector from shedding employees into a non-functional economy by giving schools and colleges stable funding. It would include the UK policy--enacted by the Conservative government--of covering 80% of the salary of laid-off employees so they can be furloughed rather than fired.  

Mainstream Democrats don't exactly oppose this kind of thing. But they don't promote it as their bread and butter. They also don't clearly expose the urgent need for it, or encourage others to expose it. At times, liberal Democrats like John Pérez actively block the creation of a budgetary need for weak Keynesian spending by preventing the open declaration of a budgetary problem. 

The current UC Board of Regents is chaired by the former Democrat Speaker of the Assembly. It includes the Democrat Lt.Governor, the husband of California's senior U.S. senator, and several former or current members of two Democratic governors' immediate offices. It also boasts several wealthy and prominent Hollywood liberals.  There is really no reason for this group not to activate itself in centrist Keynesian fashion. They would then create an urgent obligation on the part of the state to sustain its educational workforce, infrastructure, and student population, whose lives are currently set to be permanently damaged by the Covid depression. 

I don't understand the complacency that demands the current UC budgetary vagueness in which nothing is true and everything is possible, until the only possibility becomes austerity. It feels like proleptic excuse making--"we didn't fail to act, because we didn't know." I don't understand the lack of ambition, even the bare ambition to keep the rising generation whole. We can obviously do that, but it will take much clearer budget work at the level of senior management and governing boards.  It will take boards willing to support unprecedented mobilizations of political will for higher education, or at least willing not to block them,