Train Entering Station NYC on Oct 30, 2022   

I mean the question literally.  The New School (TNS, by which I’ll mean all its colleges) has advantages most private colleges would die for. Why is it now trying to push out 40% of its faculty and most experienced staff, mainly on the academic, non-arts side? How did it develop a $48 million deficit for the current year, or around 10% of operating expenditures? President Joel Towers has announced these things but does not explain them.  His administration has  published a closure list with no academic reasoning about the choices.

 

I’ve read all the documents I can access. My sense is that senior managers have made important financial errors over a number of years, and yet the underlying problem is poor academic planning. 2025’s Summer Working Groups notwithstanding, senior management have not yet constructed a multi-year collaborative academic planning process involving all faculty and frontline staff. 

 

The 2024 Strategic Plan offered values and intentions without academic goals or methods to achieve them. An October 2023 memorandum from the college deans to interim president Donna Shalala, “Budget Strategy for Financial Sustainability,” names some programs as sample possible initiatives without proposing any.  The memo mainly registers non-planning: an abandoned task force on the liberal arts in 2020, and restructuring discussions among the deans that ended in disagreement. 

 

Now, in 2025-26, senior management lack a renewed academic self-conception for TNS; they don’t have the intellectual resources required to fix the deficit.  So they have turned instead to a formulaic restructuring that is disconnected from concrete educational practices and wholly controlled by fiscal crisis.

 

I’ll explain why I say this. I’ll also do a first pass at a less destructive fix that the one the president, Joel Towers, and provost, Richard Kessler, are imposing now. It involves gradually deficits over three years, to make room for an academic redesign process that stays in the hands of frontline faculty, staff, and interested students. It would be a lot of extra work, but it’s in the spirit of the original New School, would in theory enable everyone to keep their job, and would create the more equitable and interactive TNS that everyone seems to want.

 

§§§

 

President Towers states that 2025-26 is “the third consecutive year ending with a significant structural deficit exceeding $30 million,” and that in May 2025, the Board of Trustees approved a budget with a deficit of $31 million.  Six months later, the 2025-26 deficit had increased by 55% to $48 million. Towers blames both underenrollment and increased costs, but Trump’s hostile climate for higher education, including attacks on its international students, was fully in place by May, so I’m not sure what lies behind an error of this size.  In any case, there’s clear pressure to do some big things fast.

 

But which big things? And how fast? Student enrollments have been falling for several years, first by 500 a year and then by double that.   In 2025 they’re down about 25% from 2021 (listed currently as 9102 degree students and 10,746 total enrollments).  

 

Figure 1. The New School Degree Seeking Students

 

 

 

Senior administrators have had several years, in other words, to focus on rebuilding enrollment—if that’s the actual goal.  More on this as we go.

 

Management seems to have been slow in implementing some obvious savings within the current multi-college structure.

 

Figure 2. The New School's Current College Structure

 

 

 

It’s deliberately decentered, with the academically legendary New School for Social Research (NSSR) at the crowded end and Parsons upstream of everyone else. Maybe that symbolizes something, and Parsons does have about half of total TNS enrollment.

 

Towers has announced some low-hanging fruit to be picked.  They should have been picked years ago, but better late than never. One is merging duplicate departments. Another is regularizing leaves and teaching loads: full-time faculty loads are expected to increase 10%, saving $1.4 million a year.  A third is coordinating course offerings with enrollment demands. A fourth is consolidating under-enrolled courses.   Why knows why these didn’t happen years ago, but anyway they’re of some help.  Add in an 18-^-month hiring freeze for most positions, a similar pause on retirement contributions, temporary pay cuts of 5-10% for the highest salary tiers, and some other stuff, and TNS could save say $5 million per year for the next couple of years. (I’m drawing these estimates from the document, “Cost Cutting Levers Deliverable_Updates 9.4.”)

 

Then there are the big measures.  The first is the college mergers. NSSR is to go with the Lang undergraduate colleges, Parsons, Performing Arts, and Media come together as a second academic unit, and the Schools of Public Engagement (SPE) seem to disappear. (SPE embodies the original 1919 mission of continuing education, which is more relevant than ever; its closure or absorption into nondescript courses here and there seems daft.)   “Levers” estimates the savings on mergers as $8.8 million a year. 

 

The second big measure is academic program closures.  They are pausing all PhD programs for one year.  14 departments will be merged into 7 on grounds of duplication.  7 degree programs are being terminated. 16 departments are to experience the rather Orwellian state of “Entering Indefinite Discontinuance for Redesign.” 13 are under a redesign rubric called “global, environmental, and urban futures,” and the other 3 under “the social sciences and humanities.” 

 

I don’t have access to the redesign charges and don’t quite see the point of this. Neither of these clusters name a coherent object of study, new and distinctive issue, or unified set of methods.  My default assumption is that they indicate two future superdepartments that are imagined as teaching a not-too-reduced number of students with a much smaller faculty. If true, they’d be service departments with diminished intellectual effects.

 

I started wondering whether intellectual backgrounding or downgrading was the goal for the NSSR-Lang college while pondering an odd features of “Levers.” It projects savings at three different sizes of student body—6,000, 8,000, and 10,000.  (I am not sure where they think they are now—I assume 10,000 [Figure 1] but that would normally be the middle case where 8,000 is).  I’m struck by the way that TNS 6000 saves $27 million on administrative staff (I assume through mass layoffs) while TNS 10000 saves nothing on administration, suggesting the current staff is necessary while staffing costs will naturally vary with a workload tied to student body size.

 

This does not happen with the projected savings of the merger and the program closures, or the other academic measures like regularized teaching loads.  They stay at $8.8 million savings for mergers and $22.4 million for program closures across the three enrollment cases.  This says to me that enrollment drops didn’t cause the proposed closures since they are to happen at the same scale regardless of enrollment.  Put otherwise, if enrollment stabilizes or even grows from 10,000 up, the academic offer will still be narrowed and shrunk. 

 

My research colleague Anna Champness noticed the same thing and sent this image.

 

Figure. New School Cost Cutting Proposals by Sector

 

 

It looks as though the academic core will be cut no matter what.

 

It’s worth noting that “80% of all sections across the university are taught by part-time faculty” (“College Deans” 2023).  These deans wanted to dial adjuncting down, but the current plan is likely to do the opposite (and see Parsons / Lang professor Soyoung Yoon’s comment).  Further reductions in force will lower educational quality, student learning, personal advising, and the related things a university that struggles with enrollment wants to raise.

 

§§§

 

I lack access to the relevant granular data, like departmental-level cash flows, so am offering here a few educated guesses about likely outcomes. 

 

The first is that the merger will be of little benefit to TNS.  Operating savings from mergers are generally overstated, and costs generally ignored.  There’s a large literature on this that I won’t go into (here’s one sample overview), except to say that everything depends on the group dynamics, the working cultures, of the groups that come together: do they create and maintain ongoing collaborative processes that improve teaching, research, and other substantive activities? 

 

“Integration” is hard. It requires staff and faculty overwork and goodwill. It depends on reducing what Chiara Cordelli calls “sociopolitical alienation” through meaningful self-determination. People work well together only if they expect equitable outcomes, and TNS has a long history of inequity (see Julia Foulkes’s excellent short overview and co-authored book).   Integration processes require multidimensional support and cost real money.  Unfortunately, TNS management has torched goodwill with its holiday severance pressure and has decided it has no money.  Throw in brand confusion and retroactive self-tarnishing and one can reasonably conclude that this merger is more likely to money than to save it.

 

I have similar concerns about the program closures.  Superdepartments –if that’s the plan—have weak identities and weak student pathways, especially when they’ve lost many of their experienced faculty. Lower supply readily leads to lower demand as more students can’t find the particular courses they were looking for.  Distinctive offerings are generally purged first—these are often low enrollment courses because they’re specialized, original, and/or difficult, but they make the department special and help bring students into the unit’s other offerings.  The “indefinite redesign” faculty will be under enormous pressure to find a curriculum that is supercool yet fully standardized for mass appeal.   They are clever people so may find some new semi-magical pathways for students, but this will have had little assistance from the restructuring itself—quite the opposite.

 

Mergers make sense to business consultants, who sell the restructuring process as their service while remaining unaccountable for its internal functionality.  In the UK, mergers have become the government’s official Hail Mary pass, and the KPMG report cited by a Labour minister in a Parliamentary hearing I have analyzed pitches the urgency of mergers without a single example of quantifiable savings.  This is typical: savings are the responsibility of the university customer, and anyway the faculty are always there to be blamed when things go wrong.  Mergers and closures, pushed down from above, belong to the era of High Neoliberalism when universities were told to follow the rules of scalable commodity businesses, often with disastrous results.  The bloom is off the rose, though see the sociologist Cris Shore’s important review of the major consultancies’ formula that remains highly influential as managerial device.  

 

My  best guess is that the Towers-Kessler plan will traumatize TNS faculty and staff without closing the structural deficit. I just don’t see the academic plan that’s going to revitalize yet streamline everything along the way.

 

§§§

 

So what should they do instead?  The obvious alternative is to find savings outside TNS’s academic core, while coordinating a meaningful, university-wide academic planning process rooted in frontline experience

 

TNS’s Economics Department has produced an analysis suggesting that $37 million could have been saved per year were several areas to have grown at the same rate as overall revenue (2.9% per year 2014-2024).

 

Figure 4. The New School: Internal Analysis of Deficit Sources

 

 

Cutting two areas, professional services and facilities and real estate, back to the trend line (over 2 years) would save nearly $25 million. “Levers” proposes terminating the lease at 301 First Avenue for TNS 6000, which would net $14.5 million by 2028-29.  I don’t know whether this is feasible with a larger student body but it does suggest the scale of possible savings outside of academics.

 

On administrative salaries, the Econ statement (“$30.2 million”) notes that their data aren’t detailed enough to “distinguish between necessary growth in staffing mission-critical student-serving roles and upper administration bloat.” There are another $13.5 million in potential “trend gap” savings here.  In addition, the endowment payout can be raised (again), for three years, to gain further headroom.

 

The higher ed finance analyst Rudy Fitchenbaum has conducted an analysis of TNS’s 2021-24 financial statements at the request of the AAUP.  His work shows that TNS can afford to work on the deficit over three years without laying off faculty or staff.  He observes that while TNS debt is high (tied to capital expenditures not operations), its earnings before interest, depreciation, and amortization (EBIDA) are positive ($23.7 million in 2024) and were “rock solid” as recently as 2023 ($65.6 million). Fitchenbaum notes that auxiliaries are losing $10-11 million a year and are a better target for cuts than are faculty and staff. Perhaps most importantly, he finds that TNS had reserves of $469.7 million, enough to cover nearly a full year of expenses.  This is a very healthy ratio of reserves to expenses (around 1.0), and allows TNS readily to cover its deficit.

 

In short, TNS senior management has multiple decent revenue options that allow it to close its deficit over 3 years without gutting large parts of the academic workforce and existing curriculum. It could stick with early retirement incentive programs for older staff and faculty who can afford to stop working. But it should retract the mass layoff threat and give the savings-and-planning system a full three years to work.

 

§§§

 

No faculty member I know thinks that TNS should stay as it is. Non-core savings can buy time to conduct a full-scale academic planning process.  This would build on the 2025 Summer Working Group efforts that led to the current situation.  It would feed in ideas from every unit of the university and would involve everyone at least at the level of their own unit.  Frontline expertise would provide the content. Administrators would assemble, coordinate, represent for iterative discussion.

 

This isn’t the place for any detail about the process.  But the basic idea is that TNS could pioneer a process in which democratic economic and academic planning would be applied in an existing university. Some version of this process is going to come to politics as we slowly exit neoliberalism (see Angus Hebenton & Martin O’Neill and Aaron Benanav for two examples). Universities are places that are fully capable of doing this and are also places that desperately need much better planning processes.  Faculty, staff, and students would be full protagonists in the redesign of their institutions. They would enact democratized institutional deliberation and epistemic justice, thus giving TNS a new starring role in helping to lead higher ed out of the valley of the shadow of managerialism.

 

Planning really needs to start from TNS’s glories rather than its deficits. Here are a few outsider thoughts of what might be brought into academic planning.

 

TNS is in one of the world’s great cities, in a legendary section of it (Greenwich Village). It has an international intellectual reputation.  It has a famous, admired heritage (great intellectuals of the 20^th century fleeing Nazi Europe). It has an original mission that remains inspiring, which includes, as Hannah Leffingwell points out, a very relevant pledge to “eliminate presidents and deans and the usual administration retinue and cut the overhead expenses to the minimum.” It has major brands in important, popular professions, particularly Parsons School for Design.

 

It also has an inviting acceptance rate. An interesting, accomplished high school student who didn’t get into a Columbia that rejects 96% of applicants can enroll in TNS honestly telling themselves they’ll be attending a really special and potentially more interesting place. TNS should brag about its high accessibility rate. 

 

TNS has a 10:1 student:faculty ratio, about one-quarter the effective ratio at places like the University of California, where an upper-division “discussion class” can have 40 to 140 enrolled students. And even after losing 10% of its enrollments over the past few years, TNS has 4-5 times the number of undergraduates of the small liberal arts colleges that are in real financial danger. 

 

Those are some obvious advantages.  TNS has other subtler ones.  For example, it has no science and engineering fields whose research it has to subsidize.  The University of California at Santa Cruz, once the UC system’s liberal arts campus, spent in FY2023 about $51 million of its own money supporting extramural research, while TNS spent about zero (Table 22).  Adjusting for different sizes, TNS is avoiding $25-30 million a year not having to cover losses on science and engineering research.

 

Another advantage: TNS juxtaposes doctoral and community education. It was founded for adult education in 1919, and then added its renowned “University in Exile” in 1933.  The interaction was never easy (see James Miller). Nonetheless, TNS has developed around formal academic departments and deep community engagement in a combination that many universities have been trying to invent from scratch. Few or none of them will ever have them on any kind of parity, which TNS has had at least at some times in its history. 

 

There’s another thing that makes me a bit jealous. TNS sits at the crossroads of the future of liberal arts, where the liberal and the practical arts meet.  This model will synthesize scholarly, historical, and analytical knowledge and their research capabilities with systematic education in a coherent set of skilled practical arts –digital design, sound editing, etc—brought to a professional level. The revised model will also teach quantitative analysis to qualitative students, shattering a divide that belongs to a backward positivism and the Cold War. TNS has been doing combinations of scholarship and practice for real, and not just for the marketing brochure, for a hundred years.  Who else has this already in place? Colleges all over the country have been trying to reinvent TNS’s wheel. 

 

My feelings about the state of TNS shifted as I read the documents.  For a while it seemed mainly like a case of chronic too-late and too-timid top-down management that had doomed the university to a diminished future.  But I ended thinking that Towers’ several sentences of optimism could be realized—if they are developed from the bottom up. Use cuts outside the academic core to buy three years, and do the full university community reinvention. Democratized collaboration can make it really fabulous.

 

Selling The Catalyst, UCSB on April 12, 2014   

2025 saw a shift in the hard right’s measure for the success of its decades-long attacks on universities: it moved from discrediting to subjugating the university system. It used decades-old methods in which culture wars and budget wars work together. These were now yoked under Trump II with federal coercion campaigns that extorted changes in core institutional policy through the unlawful withholding of federal funds.

 

University boards and presidents have not formulated common aims much less a joint strategy to fight the most powerful attack in higher education’s modern history, one already more destructive than McCarthyism. They have followed the mantra of corporate America: shut up, suck up, and try not to stand up.  I’ve noted that all the fighting has come from faculty groups and some professional associations.

 

The split between universities and the Trump Administration is one problem, and the internal split between university administration and faculty is another.  While faculty groups have called on their administrations to reject Trump’s illegally-compelled deals, their managers have regularly accepted them. Northwestern, Virginia, and my PhD alma mater Cornell are three that capitulated since I discussed Columbia and Penn and UCLA hanging by a thread.

 

In this post I will discuss this management—faculty split, which I nominate as the most important internal trend of 2025. I’ll discuss new revelations about the fraudulent federal case against UCLA, revelations which haven’t obviously stiffened spines. I’ll then analyze the UC budget as a paradigm of top-level administrative groupthink that has lost touch with educational reality (sections 3 and 4). The final section will discuss the larger historical exhaustion of the current regime as the context in which academics will need to ponder building of the shadow or parallel university.

 

§§

 

The Northwestern University deal was the last straw for veteran academic freedom expert John K. Wilson.  He wrote,

It is common to describe these agreements as a surrender to the Trump regime, but it’s actually much worse. This isn’t capitulation; it’s collaboration. This is complicity, not compulsion.

 

Northwestern officials made an agreement with the Trump administration, not because they were forced to, but because they wanted to do it. . . .

 

Bowing down before the Trump administration only makes sense as a strategy when both sides share the same goals. These agreements allow administrators to impose tighter controls over almost every aspect of campus life.

 

Wilson notes that the deal defied a Northwestern faculty vote of 595 to 4 against “any capitulation on the part of Northwestern University to these or similar demands that undermine constitutional rights, democratic principles, faculty governance, institutional autonomy, and academic freedom.”  He states that “the Northwestern agreement includes a long list of right-wing demands related to race, sex and politics.”

 

Wilson has been making patient arguments on behalf of academic freedom for thirty years. I’d say his patience has now run out.

Until administrators suffer the consequences of an alumni and campus backlash, they will continue bowing down to the Trump administration, sacrificing academic freedom every time they are forced to choose between free speech and the spigot of money.

This is true.  He continues: 

Students, faculty, staff and alumni need to create a subversive alternative university lurking within the shadows of the university itself. This shadow university is essential because trustees, administrators and wealthy donors ultimately control the structure of universities.

 

The first step is financial: encouraging alumni to cut off all donations to the university. The problem is that when progressive donors withhold money, progressive causes at the university will tend to suffer the most. So the solution is to create a shadow fund, an independent non-profit that alumni can donate to continue support for these goals. In the case of Northwestern, it could include independent funding for efforts being banned in the Trump agreement.

 

After offering some detail, drawn in part from AAUP-Northwestern’s president Jacqueline Stevens, he concludes, “We need shadow universities to preserve academic values and academic freedom at a time when they are under attack by government officials and campus administrators.”

 

There’s been quite a bit of thinking about this over the years, and that thinking’s time has come.  I’ve previously pondered storefront or bootleg universities in which already-employed tenure-track faculty would teach one course a year for free while hiring otherwise-adjuncted scholars for regular pay.  Figuring out how to fund this would be fun.  Some colleagues in Bologna, Italy, run courses as an International Parallel University out of a bookstore.

 

Wilson and Stevens imagine something similar being run from or next to a major university, and perhaps integrated into it with an autonomous funding and governance structure.  The autonomous governance structure could serve as practical experiment in democratized, bottom-up academic governance of a kind now purged from the country’s colleges and universities, to their intellectual and also financial detriment.

 

§§

The University of California would likely have followed Columbia, Penn, Brown, Northwestern et al.   had Gov. Gavin Newsom not publicly threatened to cut state funds to UC in exact proportion to any state monies and student tuition the UC Regents sent to Trump.  To repeat, Harvard remains the only university in the United States to have sued the Trump Administration for obvious violations of the federal statues it is using. UC faculty had to sue the Administration on their own to recover blocked research funds that a district court verified where withheld unlawfully.  It’s been a terrible year for the credibility of university managers as people who stand up for the integrity and autonomy of the sectors over which they have unilateral authority.

 

The university presidents all claim that their accords with Trump preserve academic freedom and university values, but these are self-interested and superficial readings of what is happening. MAGA is waging total war on knowledge and expertise, and as culture war discredits knowledge workers, their motives, and their expertise, budget wars undermines the material resources that allow them to do their research and teaching.

 

University managers err in thinking that compromising university principles attracts mainstream admiration. This past week saw signs that self-censoring professors (as at the University of Texas at Austin) are losing the trust and respect of their students. There are also signs that students are now rejecting campus surveillance culture: see Timothy Burke’s excellent piece on the growth of this culture over the 2010s and student opposition at Swarthmore.

 

In keeping with the year’s theme, new reporting by Jaweed Kaleem at the Los Angeles Times reveals how the investigations of UC campuses by Trump’s Department of Justice violated the Department’s professional standards. The front-page headline is hard to misunderstand.

 

Figure 1 

 

The federal investigation was rushed and inadequate, while its conclusions were determined in advance by political appointees and then publicized with a PR campaign that was “’essentially saying workplaces or colleges were guilty of discrimination before finding out if they really were,’ said one attorney, who requested anonymity for fear of retaliation.”

 

Another former investigator said, “It shows just how unserious this exercise was. It was not about trying to find out what really happened.” The DOJ attorneys assigned to UC managed to narrow the charges from multiple UC campuses to UCLA, where they felt there were Title VII violations that justified a lawsuit, though even there the attorneys “believed that such a lawsuit had significant weaknesses.” 

 

Kaleem’s findings come too late for UCLA, which already confessed to enabling antisemitism by settling a lawsuit for $6.45 million.  UC statements about the settlement sent the message that UCLA must be continuously monitored for signs of antisemitism. This confirms cultural warrior claims that universities are hotbeds of prejudice rather than being, in general, less prejudiced that society as a whole and dedicated to professional research that reduces prejudice over time.  Antisemitic atrocities like the heartbreaking mass murder of Jews at Bondi Beach in New South Wales, Australia by father-son killers should help us see campus protest and critique as the benefit it is, as even in our grief we refuse to run everything together.  

 

Put another way, UC’s response to orchestrated culture war attacks does not emerge from the educational practices of the campuses over which officials preside. These practices are hardly perfect, but their standards of argument, evidence, and at least semi-respectful dispute are demonstrably superior to those of their accusers and of political knowledge more generally. 

 

When administrators or Board chairs accept and echo generalizations about antisemitism and other systemic bias on U.S. campuses, they insult the intelligence of the academics on those campuses while dumbing down the university in the public eye.

 

§§

 

Having financial resources would give universities a chance to fight their way out of this corner—if their executives would allow it--but those are under continuous attack as well. Here I turn not to Trump’s savaging of research funding—nicely parsed this month by Aatish Bhatia et al. in the New York Times, and Anil Oza and J. Emory Parker in STAT—but to the UC Office of the President’s own budget requests for the 10 campuses of the system.

 

UC’s Office of the President (UCOP) presented its 2026-27 budget proposal at the November Board of Regents Meetings.  These are Groundhog Day for me:  the arguments and inadequate dollar increments repeat themselves again and again, as does their inadequate theory of the university: higher learning is to be measured in degree outputs, production time, and costs of production. That educational theory is pretty much what UC students started to complain about around 1964. Here’s the version in the budget item for November 2025 (page 5).

 

Figure 2 

 

Four of the six goals are about getting students onto campus in the first place. A fifth is about using ed-tech to make it unnecessary to go to a campus in the first place. The sixth defines a university education as job training. 

 

Once UCOP defines UC’s B.A. degrees as commodity outputs measured with those metrics,  then it can, year after year, request state funding that’s at best flat when corrected for cost inflation (higher than CPI) without the Senate or anyone else saying that yet another inadequate request will hurt UC quality, even though it clearly does.

 

UCOP also foolishly continues to overenroll students, defined as admitting students for whom the state doesn’t pay (4,047 of 210,635 in 2024-25, Display 3). Student throughput continues to increase at no cost to the state, which teaches the state that payment for student infrastructure is optional. The conditions of education stagnate or decline.

 

So, the budget request: in 2022, UCOP signed a multi-year Compact with Governor Newsom that locks in stagnant state budgets:  UC is to receive a 5% annual increase in its base state allocation, conditioned on increased enrollment in resident undergraduates. UCOP thus asks for this percentage for 2026-27, which comes to an additional $262.8 million, or around 2.5 percent of “core funds” (these are nearly $11 billion combining state outlays with all forms of student tuition and fees).

 

UCOP also asks for an additional $401.5 million that the state owed but failed to pay when it promptly reneged on its Compact. Odds and ends bring the requested state increase to about $703 million. UCOP further requests one-time funds of $1.36 billion for “Capital Support for Facilities Renewal, Enrollment Growth, and Clean Energy Projects.”

 

The regents’ discussion cast this as a bold request.  It’s not.  It’s a remedial budget, and a very incomplete one at that.

 

In reality, UCOP’s funding requests have locked UC campuses into structural deficits—structural in the sense that with efficiency measures already taken, and operating at capacity, costs consistently exceed revenues.  UCSB calculates a $120 million deficit heading to $160-180 million in the next couple of years. UC Davis estimates a $53 million deficit just on tuition and state funds, with campus losses from federal government follies of $118-$408 million. In their September meeting, the regents saw UCSD’s chancellor visualize his campus’s $132 million deficit.  

 

Figure 3 

UC Santa Cruz had a deficit of $95 million at the end of 2024-25 and a larger one this year.  UC Irvine claims to have reduced its deficit to $31 million, but only if every unit achieves cuts that analysis suggests are destructive and unsustainable (Part 1 and Part 2). Though UCLA has withheld an official quantification of its deficit, it is serious enough to have led to 10% cuts in administrative units along with others that prompted a nearly-unanimous Senate Resolution for full disclosure and budget collaboration with faculty.    

 

If we conservatively estimate $100 million in shortfalls per campus, these add up to a systemwide “structural deficit” of $1 billion for 2025-26.  The total is likely larger. Campus deficits have become recurring, campus allocations don’t follow need, deficits are likely larger than publicly stated, many cuts have already been factored in, and none of the deficits count federal withholdings. Therefore, even “full” compact finding will not close the campus gaps.

 

UCOP officials didn’t mention that the University of California lost a lot of money on operations in FY2025: $5.9 billion (Table MDA.3).  It lost $8.3 billion in FY 2024 and nearly $9 billion the year before that.  Obviously this suggests a broken funding model that cohort tuition and state Compacts don’t address.

 

These large losses are apparently being covered with borrowing (see below), but my point here is that they aren’t being discussed and confronted in the open session on budget and finance.

 

UCOP declines to educate the Board on the institution’s budget history.  They can therefore pretend that any given current 2-3 year period of flat or falling state funding is a temporary pause in decent growth in a healthy system.  In medicine, this would be malpractice: the actual budget context looks like this.

 

Figure 4  

 

All the additional student tuition (green line) does not bring UC to the per-student funding it would receive if its budget had grown in proportion to state per-capita income (blue line) and to enrollment growth (yellow line). 

These data also falsify UCOP’s claim that state budget challenges cause UC cuts (page 1), since these challenges don’t diminish other state agencies in the aggregate.

 Figure 5

The gap between the purple like (overall state budget) and the red line (UC's state appropriation) shows that UC's record of receiving state funds is, in the company of CSU, uniquely terrible. 

Insufficient funds over many years has meant a double reality on the campuses.  First, faculty of every kind along with graduate student employees teach and research their hearts out in an effort to achieve the highest possible quality.  Second, their working conditions steadily deteriorate out from under them, for years at a time.

 

Examples abound, though they remain uncollected: Program ambitions are quietly downgraded, projects are discontinued, great ideas never see the light of day.  All universities now desperately need to intensify personal instruction in response to “AI,” but, as The Economist recently recognized, they lack the money to do this.  Above all, budgets control, even pre-empt, academic initiatives, which curtails academic freedom. Programs for teaching and research, justified by faculty expertise, are instead subject to the decisions of budget officials, who rarely if ever share their data or their thinking with their campuses. 

 

Since students and faculty generally love their schools and feel loyalty to them, open discussion of quiet, steady quality declines is taboo.  Academic needs get lost when the professional half of the PMC relates to the managerial half via loyalty without voice. Silent loyalty is repaid by decline.  The silence enables chronic mis-budgeting on the UCOP level.

 

Though this is not our intention, we very effectively hide budget damage from the public with our silence. Faculty and students will need to be much more public about the effects of enshittified budgeting over many years.

 

§§

 

This section offers some detail about UC’s budgetary inadequacy as a primary source of vulnerability and decline.

 

–Visible Shortfalls: The regents who responded to UCOP’s budget openly disbelieved its estimates for deficit size and closure.  Regent Lee’s plausible guess was that a $400-500 million gap would remain even by UCOP’s narrow and misleading definition.  

 

—Capital Projects: In the long-time absence of state capital project support, two-thirds of the 2025-2031 Capital Financial Plan, requiring $48.3 billion, has no identified funding source (page 130).  The one-time request for $1.36 billion invites non-repetition. Spread ambiguously across new projects and deferred maintenance, the amount is one-sixth the cost of the deferred maintenance backlog on UC’s existing buildings. That is seven times larger than it was a decade ago.

 

Figure 6

 

 

 

—Tuition Increases: These are bad for students without doing enough for UC. UCOP led with evidence that UC student debt has declined, and that 2/3rds of residents graduate debt-free, which is a genuine achievement)

 

Figure 7

 

  But the regents are supposed to think that UC has eliminated financial hardship for resident undergraduates.  Averages of course conceal all sorts of bad specific cases, and student protesters interrupted the presentation until Board Chair Janet Reilly responded to their concerns by asking the police to get them out.  There’s a simple reason why many if not most UC students feel constant financial pressure, and that is that all financial aid has a “self-help expectation” in which students have to come up with at least $10,000 a year; UC reduces aid to make sure $10,000 comes from the student. 

 

Figure 8

 

 

A student earning $20 an hour would need 500 hours to fill that gap; in reality work hours are likely quite a bit more.  “Debt-free” means high workloads, including working while a full-time student. Student financial stress is another example of a problem that insufficient state increases makes unsolvable.

 

UCOP’s plan was to add one percent to the renewed cohort tuition plan (first passed in 2021), and earmark it for campus capital projects in student services.  This was rejected by the Board, which approved an additional 1% but converted it to any campus use at the chancellor’s discretion.

 

UC’s policy of cohort tuition increases revenue annually by about one-fourth of the (up to)  5% (to be 6%) increase on each new class of students. This is a pretty big increase, getting close to the Arnold Schwarzenegger Compact of 7% annual increases (for all students) of 2004.  The discussion made clear that the regents like the automatic nature of the increase so they don’t get blamed. They like the ratchet, and they like not having to re-approve the policy for years at a time (one regent suggested revisiting it every 7 years). Of course a regent who doesn’t want to receive and respond to criticism of their voted policy should immediately resign—this is a public policy position after all.  As if.

 

—Student housing. This is an ongoing problem that adds mightily to students’ Total Cost of Attendance.  The state withdrew support for new student housing years ago. The result is that even on-campus housing is geared to off-campus market standards, where developers had figured out that they can charge students by the bed rather than the room. UC responds by offering on campus housing at 79% of (an unaffordable) market, to cite the UC Santa Barbara case. UCSB’s student housing project—delayed for a decade by the Yang- Munger “dormzilla” fiasco—is to happen on a campus whose capital program is 78% unfunded (page 108). A set of astute, detailed questions to the campus officials from Student Observer Isha Khirwadkar (@2’10”), suggested its future customers already don’t like the project’s very high cost per bed ($883 and up).  Campus housing now extends the affordability crisis rather than cutting against it.

 

—Research Funding. Maintaining the air of budget normality depends on bracketing out the federal threats to up to one-third of UC’s overall budget, most of that tied to research.  This issue was simply ignored.  Equally ignored, as always, are all universities’ structural losses on research: adding up institutional fund expenditures on R&D in FY2023 for the 3 big medical campuses (LA, SD, SF) comes to well over $1 billion (Table 22), to say nothing of losses at the other campuses. 

 

It’s irresponsible to continue to ignore these costs in a major research university budget, and to not use the current crisis to move towards a sustainable research funding system.

 

­­–Institutional Debt: In the absence of adequate state funding, and with necessary limits on tuition increases, UCOP has turned to annual debt increases as an additional revenue stream. It added $7.1 billion in debt in FY2025, and $4.9 billion in FY2024 (Table MDA.2)  

 

Long term debt in FY2025 is $36.2 billion (page 30). It is triple the debt in 2009-10 of $12.5 billion (“09/10 Annual Financial Report, my archives), and nearly double outstanding debt of ten years ago ($20 billion, Annual Financial Report 15/16, page 6). 

 

UC’s net position is positive, there are lots of reserves and revenue streams, and for such reasons nobody seems to care.  But really for how much longer at today’s interest rates can UC borrow its way out of shortfalls in state support for operations and capital projects?  It’s a failure of the management system to have no public generation of discourse and ideas about this.

 

§§

 

 

It’s a truism to say that universities are now banks with a sideliner in education, but that’s all the more reason to work seriously on the reversal. Financialization actively harms UC education and that of other public universities. The whole period has erased the previous era’s interest in advanced education for non-elites.   That interest was limited to the white middle-class, but it also underwrote the period’s free public colleges.  The Trump war on knowledge and universities is an opportunity to undo our own era’s maladaptations, which rest on a bipartisan consensus that social resources should go disproportionately to elites because they uniquely know how to maximize returns on investment.  Jerry Brown saw public universities as remedial, and tech as where value came from. Gov. Gavin Newsom means the same thing when he mis-sells higher ed as a “conveyer belt for talent” into the workforce.  They both mean public universities are for worker bees, so if a Latina bookworm has to work 3 full shifts a week to stay in your lit course, well, there’s just no money to fix that.

 

If you poll people about whether college should lead to employment, of course they will answer yes.  Unemployed people suffer and die in America, and no one will go into student debt for that.  But a job is baked into college expectations and existing funding levels, meaning the public is okay with keeping the university even with inflation but can’t see why “workforce development” earns it meaningful new investment.

 

More importantly, working-class and other non-college people value thinking as much as college grads.  This should be obvious, but in any case I make this generalization on the basis of decades of teaching mixed-class courses in public university. The future’s parallel university is going to center on offering the non-market, intellectual benefits of university and not the job training.

 

Quantity has always eclipsed intellectual quality in mass higher education. Massification entered a new phase around the turn of the century, when a critical mass of politicians and business people,  with a lot of help from the right, began to doubt that a generic BA degree added much value to the economy or society. Arnold Schwarzenegger’s multi-year cuts (2003-05) operationalized a disdain for egalitarian quality. That was twenty years ago, but UCOP has never developed the educational theory to unearth the roots of permanent austerity.

 

The Canadian higher ed analyst Alex Usher recently explained that international higher education has never developed a sustaining justification for quality massification.   First, “We increased access but allowed the already-privileged to hold on to their near-monopoly at the top.” This creates a pervasive link between universities, economic inequality, and mass mediocrity. 

 

Second, “there are huge swathes of the population that deeply resent the idea that they need to spend more time in school in order to enjoy a middle-class life. . . . [A] lot of the social polarization and populism comes down, I think, to the belief that the front-of-the-class kids, the swots, whatever you want to call them (us), have monopolized good jobs.” I’d add that job training is precisely what non-college people do not want from colleges: they rightly see it as overpriced overkill if you’re just trying to get a job.

 

Third, “from the perspective of government, once higher education becomes something that is nearly universal, why should it be treated differently from secondary schools?”

 

In reality there is an evident answer to that last question that admin refuses to provide. Universities create cognitive gain, public knowledge, and social self-understanding on a mass scale. Our ancestors used to bundle these elements as “education for democracy.”  It is the best way yet devised, in tandem with social movements and other institutions, of getting a whole population in position to solve complex and frightening problems without today’s elevated levels of fear, revulsion, and violence. Universities are the main systemic developer of the capacity to go a little deeper – on a mass scale.

 

The parallel or shadow university will need its separate governing structure.  And it will also be able to grow on the basis of now-hidden intellectual missions that, I believe, will enjoy mass popularity that job training does not.

 

In the meantime, please say in any format you can what is happening to you.  We need an outpouring of tales from the front.