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Monday, April 27, 2015

Monday, April 27, 2015

The LAO and Permanent University Austerity

The big story in Higher Education this year has been the threat of massive budget cuts.  From Wisconsin to Louisiana, from Kansas to Arizona, and from Maine to North Carolina, state governors and legislators have proposed or enacted cuts to public colleges and universities. Although the outcome of this year's budget struggles remain uncertain, it does seem clear that California is not going to impose new cuts. Instead we seem to be battling over the size of small state funding increases.

That contrast between California and other states might appear to be grounds for confidence in the future.  But that would be premature.  Although the state has increased funding over the last several years and is proposing a small increment this year--it is important to recognize not only that these increases do not compensate for the years of cutbacks but that they help to solidify a strategy of permanent austerity budgeting.

One way to see this point is to look at the recent Legislative Analyst's report on "enrollment funding" for UC.  The main point of the report is to call for the Governor and Legislature to reinstate "enrollment funding" (i.e. to tie state funding to specific enrollment targets for the University).  Now I should say that I have no problem with the idea of enrollment funding.  Both the Governor and UC have done away with it (the Governor I suspect because he doesn't want to be obligated to increase funding with enrollment and UCOP because it allows them greater flexibility should they want to restrict enrollment without losing state funds).

If made correctly, there are good arguments for a greater linkage to tie funding to enrollment and to ensure that funding goes to support that enrollment (for instance ensuring that a new permanent faculty FTE is hired for every 19 additional students as is assumed in the financial calculations). (4) But the way that the LAO seeks to organize enrollment funding is less defensible and also revealing.

The logic of enrollment funding ties increase state support to the marginal costs of additional students.  The LAO calculates the marginal cost at $9244 for general campus students (UC's is slightly higher but I am going to use the LAO's). (8)  The LAO recommends setting the present year as the baseline for enrollment--which would also lock in the per student funding as it now exists as a baseline.

They propose that present enrollment be considered the baseline because it would avoid a conflict over whether funding should go for increased enrollment or to answer UC's claim that there are significant numbers of unfunded students.  But here is where the problem lies. Instead of providing a way to address the conflict over whether or not the state is fully funding students, the LAO simply eliminates the question by refusing to engage with it.  And that has serious implications.

The easiest way to do see these implications is to accept the LAO cost logic and then look backwards over the last decade and one half.  To be sure this means that all of what follows are estimates--but I think that the general picture is clear.

In 2001-2002 UC received $3,279,000,000 from the General Fund.  In the fall of 2001 there were 167,914 resident students enrolled on the general campuses.  In the fall of 2013 (the last year that I have good numbers for) there were 196,917 resident students enrolled on the general campuses.  That increase of 29,742  should have led--given the LAO's calculations of marginal costs to a funding increase of approximately $275M from the state (and this is without additional costs for health system students).  Put another way, the 2013-2014 UC General Fund support would have been $3,560,000,000. Instead it was $2,884,456,000.   The Governor's proposed General Fund contribution for 2015-2016 is $3,106,138.

The numbers, although approximate, are clear.  The LAO's proposal on enrollment funding would lock UC into a permanent structure of state austerity.  Although the state does pick up some of these losses through Cal Grants they do not recover all--nor do they even begin to backfill the long-standing under-funding of the University.  Students, staff, and faculty have been forced to assume the costs of this austerity--whether in terms of higher tuition, larger classes, or increased workloads.  By all means have the state engage in enrollment funding. But also have the state fund that enrollment at an adequate level, and allow it to rise as costs and educational needs change.


Unknown said...
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California Policy Issues said...

The thing to note is the LAO is not neutral when it comes to the legislature vs. the governor. LAO is an arm of the legislature. Thus, LAO dislikes anything (such as the Committee of Two) that seems to keep the legislature out of the budget process.

Michael Meranze said...

@California Policy Issues
That is true but in this context I think not very relevant. As I indicated in the post I don't think that enrollment funding is necessarily a bad thing if done thoughtfully--but that isn't the case here. Instead, the way that the LAO frames the issue leads to permanent underfunding for University--even according to the logic of enrollment funding. They want to wipe out years of funding shortfalls and then claim a mulligan.

Fixating on the struggle between the LAO and the Governor diverts us from recognizing the deep ideological commitment they both share to austerity funding. That is the issue here.

Phyllis Orrick said...

Since I came to this item via the very worthy UPTE Monday memo, and it was followed by this item, I thought it apt to include it with the note that as long as we're forking out 375K to Brostrom and his ilk, the problem is not going to go away.

Nathan Brostrom, UC’s chief financial officer, has been busy countering reports about the “UC hiring spike” and high salaries of UC administrative staff in letters to the Orange County Register and Capitol Weekly.

Chris Newfield said...

yes that's really too bad because it distorts the real issue, which is the very large salary mass of non-instructional and non-research personnel that has been growing at a much faster rate than permanent I&R staff. It also leaves the public in the dark about why costs rise so much. So what exactly would they get if they reversed the public funding cuts? Would it mean restoring admissions rates for CA residents to all the campuses, to take one example in the news? With exec pay, capital construction etc in the front of everyone's minds, the default answer is no it wouldn't mean more access, lower costs, or better instructional quality, so the deadlock will continue . ..

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