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Thursday, January 9, 2014

Thursday, January 9, 2014

Austerity Premises Refuted, Governor's Budget Preaches Austerity

There are no nasty surprises in the governor's budget proposal for higher education. For UC it's pretty much what we've heard: a 5 percent increase in state general funding in 2014-15 (stated as fractionally higher than that), and 4 percent increases in the two years to follow. These small increases leave the 2014-15 state share 14 percent below the 2007-08 level (Figure HED-01).  Following Gov. Brown's previous statements, these increases are made contingent on a tuition freeze.

The budget proposal has some contradictions that UCLA FA Blog explains.  I am if anything even more concerned than my colleague about the "Wall of Debt" alarmism in Figure INT-03 (page 4) as it affects both retirement and state investment, but that's a topic for another time.

The governor's framing narrative confirms that the historic state funding model is dead. This isn't the first time we've pointed this out (here's my November post on the subject, and Michael's from February on Sacramento austerity).  But the official proposal document is quite explicit this time.

First, after offering some moving language bout how important higher education is to the future of the state, the budget proposal asserts that the universities' requests to start rebuilding public funding are based in their "business-as-usual model of providing instruction" (35).  It defines what we normally think of as UC's combination of research and instruction  as the "highest cost-structure" which "receives the highest per-student subsidy" (36).  There is no mention of what that money does, other than express high-cost traditionalism.

The document does not offer a single example of high-cost business-as-usual so that we could understand what the governor's Department of Finance is talking about. I assume DOF means that UC and CSU haven't converted many or most of their courses to on-line.  If 2012 was the Year of the MOOC, 2013 was the year of the bust, both of educational claims for MOOCs, which even Udacity's founder has described as greatly exaggerated, and of the claims for huge cost savings.  My analysis of the budget for the Udacity-Georgia Tech online engineering masters showed no cost savings for online programs that produce decent results, and we are still waiting for the technology that delivers high quality at a new low cost.   The legs have been cut out from under the claim that something about face-to-face instruction fails to exploit massive potential savings--and yet the governor justifies ongoing low investment on that failed claim.

Obviously the governor thinks he is providing management incentives to improve, and there are certainly things about UC management and organization that can be improved. In reality, operational improvements take time and money, as the history of failed corporations abundantly proves.  Absent reinvestment--and internal UC organizational reforms--Gov. Brown's austerity will have two effects:

  • UC will make greater use of adjunct teaching labor (it has above-average tenure-track ratios now, but won't be able to sustain them).  This will happen at the very moment in which the factory model is obsolete, and yet that is increasingly all that UC can afford.  UC students need the same individualized, active learning that their friends at Stanford get so that they can succeed in creative industries, and yet this is exactly what the state's massive cuts and austerity restorations are not going to pay for.  Do Californians really want their public university children to get the leftovers of the creativity industries and whatever else Stanford's D-lab has put on TED?  That, unfortunately, is the funding model, even if we all manage to rise above it.
  • UC will shift an ever-higher proportion of its daily energy to what UC Berkeley EVC George Breslauer calls "unit-level entrepreneurialism, in the article that was the subject of Tuesday's Remaking post, EVC Breslauer is entirely right that this is what the austerity university is doing and will do: break down the campus into units, break down unit into discreet activities, and then charge a toll for each of the activities that can possible bear one.  Some are trivial, like renting rooms for weddings, and others, like executive education, divert resources and energy away from public education and towards forums that are exclusive because of their enormous surcharges.  EVC Breslauer estimates that this will yield $10-20 million. This is a fraction of the Berkeley campus budget, and comes with high transaction costs (could someone in higher ed management circulate Ronald Coase's "The Nature of the Firm" (1937) or at least the Wikipedia entry.  Could Brad Delong write a memo?). Above all, it will change its practices on the metabolic level from open to closed, from free to taxable--exactly as the governor's budget requires.

The governor is also ending the state's obligation to pay for enrolled resident students.  This has two parts.  First, some state funding is shifting from allocations to UC to scholarships for students (again see my November post mentioned above). The state will be more like the federal government, and funding more like a voucher program.  The second part is equally serious, which is that the state will simply not provide funding based on per-student workload.

 The Administration’s long‑term plan moves away from funding higher education based on enrollment targets. By itself, enrollment‑based funding does not encourage institutions to focus on critical outcomes — affordability, timely completion rates, and quality programs — nor does it encourage institutions to better integrate their efforts to increase productivity given the state’s investment. Instead, it builds upon the existing institutional infrastructure, allowing public universities and colleges to continue to deliver education in the high‑cost, traditional model.

Actually, we do need to build upon existing infrastructure to provide educational services. The state hasn't been doing this properly, and to imply that stable funding inherently corrupts is straight-up Thatcherite right-wing ideology for which there has never been decent evidence.

Why is the Brown administration using far-right arguments to justify a failure to meet the real higher educational needs of the state? Is UCOP actually contesting this? Could somebody up there find out? The current path, and its incoherent justifications, leads onto very bleak terrain.


Anonymous said...

In California's boom and bust economy, higher education typically takes disproportionate cuts in bad years, but typical received disproportionately higher increases in good years (often in the form of fee buyouts). This budget doesn't even begin to restore the cuts UC and CSU took in the bad years, nor does it fund absorbed cost increases, and worst of all -- the Governor is telling UC and CSU they can't raise tuition but is NOT providing the funds to "buy down" the increase. So not only is the traditional linkage to enrollment funding ignored, so is the traditional linkage to fee levels. UC has given up the two traditional levers it had in Sacramento and with a multi-billion surplus, UC will miss the chance for a restoration that could drive California's economic revival.

Chris Newfield said...

yes well put, except that we can't afford to miss the restoration. We muddled through for a few decades of ups and downs and that's exactly what gov. Brown has ended. The UC community needs to up the pressure and improve the arguments--I'm not sure why we are so fatalistic or even complacent about how at least we're not getting cut anymore . . .

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