Liner Note 28. Hyponormalization of University Budgets

Dublin Bay on June 17, 2025   

Universities can’t fight an impeding fiscal disaster if they can’t face its size and destructive power.  Are they facing it?  Would they fight it? 

It's sometimes yes on the first question, but the public versions so far suggest not fight but capitulation.  

 

Today’s example is Minnesota--with condolences and heartfelt solidarity to everyone affected by the recent political assassinations in the Twin Cities.

The AAUP chapter at the University of Minnesota-Twin Cities put together a presentation for faculty about their administration's budget announcement. They cite their administration saying, “a financial model that relies on maintaining academic programs and activities at current levels is not sustainable, nor is attempting to be great at everything.” This suggests both downsizing scale and diluting quality.

 

The administration’s plan is a 6.5-7.5% tuition hike coupled with 7% cuts to academic units.  While academic units are cut $89 million, non-academic units lose $2.7 million, which aggravates existing administrative bloat.  The result would be our old friend “pay more to get less," and our newer friend “enshittification” of the academic core.

 

These cuts to the core come at the end of a decade of cuts.  Cuts on cuts, for some reason a tacit reset to the benchmark each year as though there’s no real cumulative damage, which of course there is.

 

 

While they are cutting academic units by $89 million, Minnesota’s administration describes a decline in direct and indirect research income of $85 million, perhaps a bit more than 10% of their total research revenues. 

 

Two things jump out here. One is the likelihood that they are robbing teacher Peter to pay researcher Paul.  The numbers are oddly similar.  President Cunningham's administration might say this is a misleading oversimplification, but if so, they should detail why. 

 

 

The administration can conceivably force instruction to fill in for research cuts only if those cuts are smallish, like 10%. But what if the research cuts are actually much bigger?  Then the instructional cuts are pointless, and also allow admin to avoid the real fix to the Trump cuts—a big, coordinated political fight with large state bridge funding, 

 

If Trump’s cuts go through, they will be catastrophic. To reduce my previous list of ten sources of cuts to a big three, they are happening to state funding, student tuition (international and residential), and federal research funding. 

On international student revenues, Trump’s Secretary of State Marco Rubio has suspended interviews for student visas worldwide, so new international student numbers could go to zero in the fall. That will mean a loss of about one quarter of international student fees off the top—plus other losses due to departure, non-matriculation, deportation, and the like.

 

There are also three kinds of cuts to federal research funding.  First is the cut of all indirect cost recovery rates paid by NIH and other major agencies to 15%. I estimated the effects in February (see lower estimates via Eric Hays’s calculations for the University of California).  ICR policy is tied up in the courts, but the agencies may implement it anyway, and seem already to be. Universities could lose half to two-thirds of their ICR.

In Minnesota, "If the 15% cap is extended to all federal agencies, [the University of Minnesota Office of Cost Analysis] has projected that cuts to the University would increase to a range between $155M to $188M per year over the next five years"--on a base declining to $750 million.

 

The second kind of cut is current-year cancellation of grants coupled with non-payment on grants that haven’t been officially canceled. The Financial Times reports,

Treasury department data shows cash disbursed from the National Institutes of Health dropped to $2.8bn in May, down 28 per cent from April and the lowest absolute-dollar outlay since September 2014, according to Jefferies, an investment bank.

 

There’s also the spectacular blanket withholding from universities like Harvard, Penn, Cornell, Columbia, and Northwestern on top of the large numbers of individual grant cancellations. Grants Watch recently raised its estimates of non-disbursements and cancellations. The total is now about 20% of NIH’s current-year budget for research. I don’t know why the University of Minnesota thinks its losses are half that.

 

The FT again:

The frozen NIH funds have blown a hole in university budgets across the country. For example, Northwestern University has been spending about $40mn a month to cover the missing NIH funds, according to Carole LaBonne, a professor at the Chicago-area school.  

“Research labs are looking at really stark choices about laying off personnel and not being able to take graduate students,” she said. 

 

Northwestern had not been paid since late March but had received no official notification from the government about a funding freeze, a university spokesman said. He confirmed the university was spending tens of millions of dollars a month to continue research.

 

Northwestern is a bad case, but there’s a lot of other overdue funding that may never come in.  Similarly, current-year NSF cuts were over a billion a month ago, on about $9 billion (Table 4). This 11% cut may now be higher.  

 

The third type of research cuts is the set of massive reductions slated for next year.  

Trump has requested cuts to science funding across the board — the US National Institutes of Health (NIH) would lose roughly 40% of its budget compared with 2024 levels, and NASA would be pruned by about one-quarter — but the NSF would lose a whopping 57%, taking its roughly US$9-billion budget down to $3.9 billion. These top-line numbers aren’t new: the administration released a ‘skinny’ budget with similar figures in early May. But the detailed budget released last week gives a fuller look at the historic cuts intended for the NSF — including the elimination of 99% of funding for clean-energy research and the surprise shuttering of a gravitational-wave observatory.

 

Let’s imagine that after some bargaining in Congress the two lead agencies, NSF and NIH, only get cut by 1/3rd.  For NIH that’s 33% on top of a 20% cut on the current year.  So Minnesota and everyone else should put their default guesstimate on 2024-26 cuts to direct research funding at 50%. 

 

This is in fact such an assault on the public science / federal funding model that university managers are dreaming of private equity.   You may be soon be reading more paragraphs like this one in STAT about Harvard.

 

Under the deal announced Monday, İş Private Equity, a Turkish firm, has committed $39 million to a laboratory run by Gökhan Hotamışlıgil, a professor of genetics and metabolism at the T.H. Chan School of Public Health. The firm, which is a branch of Turkey’s İşbank Group, also plans to invest an undisclosed amount of money in any drug candidates that come out of Hotamışlıgil’s laboratory and are moved into a new biotech called Enlila.

 

This model is a disaster for basic research and public missions without big return on investment, which is all of them.  But it might explain the University of Minnesota president’s use of $74 milion in reserves—perhaps to prime the private investment pump by giving sciene and tech investors some funding up front.  I’m speculating, but that’s the logic.

 

The default admin plan seems to be (1) backfill reseach losses with teaching and department funds; (2) hope the cuts are a fraction of the stated Trump plan; (3) use admin reserves to seed private partnerships for research; (4) project no need for serious new state support; (5) keep the faculty demobilized with minimal and lowballed information.

 

Paul Campos has a truly exasperated post about the structural deficit at the University of Colorado-Boulder School of Law that was deliberated created and then absurdly plastered over, so “that the law school is effectively broke, and we’re going to have to start laying off people in the next year or two, including some of the faculty who have been paying no attention to any of this because it’s so boring.”  

 

Campos is right that budgeting fairytale storytime is a standard management strategy, generally leading its docile auditors to accept Matt Seybold’s Ponzi Austerity.  It’s a go-to resource because it’s the Great Demobilizer, and also mad suppressor of noncapitalist realism and structural change. However, the Trumpian Massacre raises the question yet again of how much longer budget surreality can carry on.

 

Or hyporeality.  And hyponormalism.  If society has moved into the hypernormal, university management is still enforcing the hyponormal in relation to its expanding fiscal crisis. 

 

In both cases, people carry on as though the system wasn’t actually broken. In hypernormality, borrowing Alexei Yurchak’s term, the system’s dysfunction is widely noted. In hyponormality, information is withheld and discussion is blocked so that dysfunction can be denied.  In both cases, administrative authority is maintained as program damage propagates through the system. 

 

If the Trump Administration follows through, it means public universities need an entirely new state funding system.  If it follows through, states will need to figure out how to send fewer taxes to the feds in exchange for picking up more federal programs, academic research included.  But Minnesota’s hypo-planning will keep that discussion from happening. 

 

Like everywhere, that campus needs a much deeper and more open set of arguments about what to do.

Liner Note 27: Relentless Powers of the Grassroots Experts

Amsterdam, the Netherlands, on May 28, 2025

The foundation I direct, the ISRF, had particularly good annual board meetings at the end of May, in Amsterdam as usual. I then got food poisoning, which was a uniquely energy-draining experience that lasted a week. My advice is never ingest campylobacter bacteria for any reason, which seems to be what I did.  I did barely manage to write a Director’s Note about the research we discussed, “ISRF in the Polycrisis,” about which more at the bottom.

 

While we were meeting, the Atlantic made the New Dark Age official, via a piece by Adam Serwer. This got my attention, partly because it’s true and partly because it’s a favorite phrase of mine. I relaunched this blog just before Trump’s 2024 election by calling for an epic fight for knowledge in “our new dark age.”  I’d liked James Bridle’s 2018 book, New Dark Age: Technology and the End of the Future. I’d also thought a new dark age had started with the Global Financial Crisis in 2007-08, just before I’d moved to Lyon, France as the director of UC study centers there. 9/11 had militarized politics and society,  the financial crisis had crushed working people and spread anger everywhere, the Obama administration bailed out Wall Street not Main Street, and the Occupy movement couldn’t counter the base of the Tea Party that led directly to Trump and MAGA six years down the road.  I was also watching a lot of Battlestar Galactica at the time. 

 

The only way deal with knowledge destruction is to ramp up knowledge creation.  This was brought home to me at the start of the current crisis of federal persecution of higher education, which was the Congressional hearings in December 2023 on the alleged antisemitism epidemic on America’s college campuses. The most important first-round result was the purging of Harvard University’s first Black president, Claudine Gay. 

 

Like most of you, I’d been following private equity mogul Bill Ackman’s vendetta against both pro-Palestinian campus speech and Harvard’s new, now ex-president Claudine Gay.  He linked her with the alleged corruptions of merit known as diversity, equity and inclusion. He stoked the charge that she’s soft on antisemitism. Then he loudly pressed charges that she is a plagiarist, dubbing Harvard’s retention of her “Gaygate.” Harvard’s Corporation board finally capitulated and accepted Gay’s resignation, meaning that they let go the university’s first Black president and second woman president six months after they’d proudly hired her.

 

On January 2, 2024, the New York Times published Claudine Gay’s resignation letter. On January 3^rd, Business Insider ran a story about Ackman’s successful campaign in which he exonerated himself of bullying charges. On January 4^th, Business Insider flipped the script with their now famous story, “Bill Ackman's celebrity academic wife Neri Oxman's dissertation is marred by plagiarism.” You probably remember the rest: Ackman went nuts in the defense of his wife. Among other things he promised to review every single MIT faculty member for plagiarism, using “AI.” He also had to explain an apparent double standard in which Gay had to be fired for her plagiarism while Oxman had to be excused for hers. 

 

Part of Ackman’s attempt to distinguish the wife he was defending from the president he was hounding was to question whether it’s possible to plagiarize Wikipedia.  He asked a series of incredulous questions to that effect.

 

Under fire, it’s not easy to know how to deal with knowledge immunity—possessed by people who are too rich, powerful, connected, or managerially entrenched to have to care about what you know that they don’t.  

 

It’s not easy to know how to deal with plutocratic bombast. It’s especially not easy in the normal situation in which the bombast has created its own reality and the analysis will be too little too late. 

 

And yet tech analyst Molly White dealt with these issues straight on by reviewing Ackman’s questions and answering them.  

 

“How can one defend oneself against an accusation of plagiarizing Wikipedia for a dissertation written 15 years ago in 2009?” Ackman exclaimed. White showed him Wikipedia’s “view history” link you can click to see any page on a given date. 

 

“Has anyone (other than my wife) ever been accused of plagiarism based on using Wikipedia for a definition of a word?” Ackman wailed. White showed him the Wikipedia page listing the many people accused of plagiarising Wikipedia. 

 

In each case, White offered literal, professional answers to each of his questions and with less snark than they deserved.  

 

What moved me was White’s confidence that knowledge mattered.  She acted as though her knowledge could confront his power--professional knowledge could confront managerial or executive power.  She wouldn’t change Ackman’s mind. But her knowledge could reduce his power by changing (or clarifying) other people’s minds. She made it less likely that he’d again defend Oxman by claiming that Wikipedia is community property that no one can steal. 

 

Asking myself why I was so impressed by White’s approach, I saw it as a sign that my baseline assumption about the practical effects of professional expertise had gone negative during my years of scholar-activism at the University of California and then at the Modern Language Association. The lack of institutional back-up created a default sense of the inevitable triumph of mistakes. 

 

White had started her answers by commenting about her knowledge status. She noted that she’d been editing Wikipedia since 2006, that she had over 100,000 edits, and that she’d spent six years on Wikipedia’s version of the Supreme Court. I know a little bit about Wikipedia, she said, which referred to what was a major expertise that had taken the form of a “hobby”—a serious hobby in the sense that writing open source software as part of a global network where you aren’t getting paid by a corporation is a hobby. Or that professional humanities scholarship, generally unfunded by universities or the government, is a hobby.

 

You nerds who also have a “niche hobby,” White said, 

probably know that very unique rage that you feel when somebody tries to speak confidently about that hobby without actually bothering to learn that much about it. This happens to me a lot with Wikipedia, because everyone knows what it is. . . . But in spite of knowing what it is, people don’t actually understand much about how Wikipedia works. That apparently includes Bill Ackman, who came out today with a list of questions about Wikipedia that he’s definitely curious about, and somehow unable to look up the answers to.

 

So, there’s the skill and knowledge that some unknown person painstakingly builds up over years and years of their life, in total obscurity and generally at their own expense. There’s the oblivion to that skill from the figure of power, the casual not knowing that the skill much less the person even exists. There’s that big person’s indifference to the labor of finding out.  There’s that big person’s demand that someone else do the work of answering the questions he could answer if he did his own work.  There their replacement of knowledge with conventional wisdom propped up by their high status. There’s that figure of power’s indifference if not hostility to the people who do know—all the non-managers and the non-executives with laboriously acquired skills whom we could call the cognotariat, the vast majority of whom do not work in colleges or universities.

 

The situation that causes unique rage –the confident wrong speaking from empowered ignorance—afflicts knowledge institutions and runs politics and the media, which is a powerful agent in the political field.  It fuels the orc armies of the worst overlords. It makes the solutions seen by ordinary people impossible to implement or even to hear.  The rage comes partly from the willingness of Ackman et al. to use power without knowledge and to refuse to see knowers as agents of history.  The rage comes from how well this works to keep professional knowers from seeing themselves as agents--not to mention from allying themselves with non-professional and non-university educated knowers (French farmers spring to mind, as well as authors of community projects like this digital museum co-created by one of our ISRF fellows, Dr Chamion Caballero. And so on).

 

The University of California was the main site where Remaking studied this core situation, in which the academic professionals—and their lives in knowledge--are ruled absolutely by amateurs.  The blog has been about evidence-based argumentation as a weapon of the (relatively) weak.  It sought to correct the record—the record about the budget, about the state of teaching and research in universities, about what wilful administrative blindness was making no longer possible, about the gap between publicity and reality, about everything that needed to be done.  The blog has also about entirely reframing the status of knowledge work. 

 

Of course, the wider context is the plight of knowledge and its institutions around the world. Rulers have always been bad for non-state knowledge, but today there’s a massive contradiction between the war on knowledge and the knowledge that survival requires—about climate, finance, racism, inequality, and war itself.  War’s override of global cooperation is becoming the hallmark of the 2020s. 

 

Later in “A Wikipedian explains Wikipedia to Bill Ackman,” Molly White goes into some detail about copyright, authorship and communing. Ackman wants to brush off Wikipedia apparently because he thinks that something  collectively created is basically public property, and anyone can help themselves to it. This is the commons in the zone of tragedy, in which a lot of people work basically for free to create a common good of enormous and ever-growing common value, and the Ackmans ignore them, don’t pay them, disparage them, and appropriate it. 

 

White explained that images, writing, etc. are copyrighted as soon as they are recorded – as established by the Berne Convention in 1886.  This has nothing to do with plagiarism, she says, which is failing to attribute and thus take someone else’s work as your own (a labor issue!), as Oxman did. In addition, she pointed out, Wikipedia is not overall a public domain but a commons operating with the Creative Commons Attribution-ShareAlike License, which “requires that you attribute Wikipedia and its various editors who actually wrote that content.”

 

In direct opposition to Ackman, White expressed a knowledge commons founded on the rights of the creators.  The rights include the right to attribution—to recognition of the labor and its product—and, unmentioned but everywhere in the knowledge crisis, the right to payment for work. 

 

White writes for a lot of newspapers and magazines, as we used to call them. At most points in history, she would have had a full-time unionized job with benefits at a major newspaper, writing about tech with the always-developing expertise that one finds among specialized journalists like the FT’s Katie Martin on finance.

 

But academia’s sibling, journalism, is famously being gutted.  Three weeks after its plagiarism scoop about Neri Oxman, Business Insider lost 8 percent of its staff due to cuts from its owner Axel Springer.  

 

For a while, the sector thought it might be rescued by billionaire charity. But billionaires generally don’t care about unsung local journalism where much of the most important coverage happens, and they don’t like to lose money. The doctrinal billionaire who bought the venerable and pretty good local paper, the Santa Barbara News-Press, in the 1990s, ruined it by dictating the editorial line and by decimating its professional staff. She finally closed it in mid-2023, so a wealthy, near-majority Latino, militantly environmentalist, highly educated, well-known smallish city with a research university lacks daily news coverage, with the online Noozhawk and weekly Independent trying to cover behind-the-scenes manoeuvres during a dicey transitional period for the region. Its archives were nearly sold off to a Malta-based operator of zombie sites, and were saved only by last-minute local efforts.

 

Meanwhile, billionaire Jeff Bezos’ Washington Post shrank staff in October 2023, while billionaire Patrick Soon-Shiong started 2024 at the Los Angeles Times by cutting 115 reporters, including a set of younger Black and Latino staffers. Both have interfered editorially to shield Trump from criticism on behalf of their business interests.  The long 2010s saw journalist employment fall by 26 percent.

In the mid-1980s, an unknown reporter named Gary Webb broke the Iran-Contra scandal that exposed the Reagan administration’s murderous meddling in Central America with money illegally extracted from the Iranian government. He was backed up against massive state-sponsored criticism by his paper, the San Jose Mercury-News.  Would that regional paper cover a reporter caught in a global controversy today?  Could it? Journalism and universities are struggling in parallel to sustain knowledge creation.  Meanwhile, much of the most important work has had to become self-platforming.   

 

The extractive structural economics infuriate me, but the people surviving and even thriving in the semi-ruins inspire me.  

I’ll mention just a couple more. There’s Daniel Denvir, perhaps the most comprehensive and rigorous preparer for interviews I’ve ever heard.  

There’s Paris Marx, now heading towards his 300th episode of Tech Won’t Save Us, which more or less the best critical tech podcast in English. As far I as I can tell he did the whole thing by himself each week until fairly recently.  He had a breakthrough when The Nation magazine agreed to carry him in some form I wasn’t clear about, until he mentioned that they were promoting his podcast but weren’t actually paying him something to do it. He depends on Patreon—I am proud of my premium subscription, and encourage you to join me if you follow tech at all. Marx has 1443 paying subscribers after several years of brilliant and heroic work. I mean heroic, in the sense of high-quality work under a very heavily workload of reading and prepping a book and more a week while staying on top of tech in general. One day, he mentioned to another similarly accomplished younger tech intellectual that before he started the podcast he had been working as a phone agent in a call center. “Me too!” his guest replied. They’d learned a lot about the limits of tech, and no doubt helped a lot of callers like me, while also wondering, I imagine, how they could possibly take their leaps basically by their flying bootstraps into careers of non-stop and even influential analysis, which they then did. 

 

So really this blog is the least I can do, in solidarity, to keep thinking and writing as part of a massive collective effort to build a radically different knowledge system that can repair the world.

 

In so doing, every problem can be paired with a knowledge response.  Here’s the one I showed at our foundation meetings—ISRF research in red, other research that needs doing in black. Join us.

Betrayed: UC Is About to Make $267 Million in Unnecessary Budget Cuts, Harming Instruction and Undermining Goodwill with the State Legislature and Governor (Guest Post)

Irvine, California on May 25, 2018   

by Trevor Griffey, UC Irvine. 

How does it feel to be laid off unnecessarily? 

June 1 is the deadline for University of California (UC) campuses to reappoint lecturers, who teach one third of all undergraduate classes at UC, for the 2025-26 school year. Our union, UC-AFT, expects hundreds of UC instructors across the state to lose their jobs, their health insurance and possibly their careers.

 

UC campus administrators will blame its mass layoffs on a budget cut from the state legislature. But that budget cut may never come. And even if it does, many UC campuses likely have enough money in their reserves to offset the resulting cuts.

 

In January, the Governor proposed cutting the UC’s general fund allocation by 8 percent, or $397 million, for the 2025-26 school year. UC campuses incorporated these cuts into their budget plans for next year.

 

In response to months of lobbying from faculty, students, staff, regents and even administrators, the Governor reduced his proposed budget cut on May 14 from 8% to 3%, from $397 million to $130 million. That’s a difference of $247 million, enough to save hundreds— if not thousands— of jobs from the chopping block.

 

Publicly, the UC President praised the proposal, saying “We are deeply grateful to Gov. Newsom for recognizing the value of the University of California’s contributions to our state in the May Revise.”

 

But privately, the UC’s campuses are moving forward with 8% budget cuts in 2025-26 anyway, as if the Governor never made his announcement.

 

At UC Irvine (UCI), where I teach US History, the effects are devastating. If UCI were not moving forward with the assumption that the state will cut UC’s budget by 8%, UCI could save as much as $21 million next year. Instead, UCI is cutting over $10 million from its schools in 2025-26. The School of Law will receive a 30% cut next year. Pharmacy, Nursing, and Arts will all be cut by more than 10 percent. Business, 8%. The School of Humanities is managing a 4% cut by laying off over 20 lecturers and likely even more graduate student employees, making it likely that there won’t be enough composition classes next year for first year students to meet the prerequisites to take upper division courses.

 

And so the story goes, across the state, with dozens of potentially unnecessary cuts at each campus. UC Santa Cruz, which is planning on cutting $13.7 million from its budget this year to cover for state budget cuts that may never come, is decimating its language instruction— eliminating German and Farsi instruction altogether, cutting half the Italian curriculum, eliminating second year Arabic. UC Merced, which has already budgeted for a more than $11 million cut from the state next year, has already laid off eight senior composition instructors who each had over 6 years of teaching experience. Hundreds of others nervously await the June 1 deadline for UC to reappoint them for next year.

 

There is a particular cruelty to UC campuses laying off instructors that it may not need to, while sitting on a combined $6.5 billion they could draw from in the Blue and Gold Endowment Pool. The Pool, which is a short-term investment vehicle for UC campuses, has had double-digit annual growth until Trump was elected. According to UC, the fund “helps our campuses increase their revenues while reducing reliance on state funds.” Campuses zeroed it out entirely in 2020, withdrawing $1.8 billion to help manage budget uncertainties during the COVID pandemic. Yet it’s not clear if any campuses plan on drawing it down to mitigate or prevent the $397 million in cuts that they’re making next year.

 

UC budget cuts also set up a nightmare scenario for the state government. The Governor—responding to lobbying from UC students, faculty, staff, and the public— has risked political capital by proposing to reduce the cut to UC’s budget in a year when California is facing a significant deficit. At the same time, the Governor’s revised budget includes painful cuts to health care for undocumented immigrants, and wage freezes for state employees that may violate their collective bargaining agreements.

 

If the California state government cuts UC’s budget only $130 million, but UC campuses continue to cut $379 million from their budgets anyway, UC won’t just inflict needless suffering on its students and teachers. It will have completely violated the goodwill of the Governor and the legislature by padding its reserves with money that could have gone elsewhere.

 

That’s why, if the legislature is going to protect 4-year higher education from deep cuts this year, as it should, it may have to stipulate that in exchange, no recipient of UC or CSU general fund revenue should increase its reserves during the 2025-26 school year.

 

The problem of UC campuses moving forward with hundreds of millions of dollars of unnecessary budget cuts also highlights a need for greater transparency in public higher education spending.

 

The California Legislative Analyst Office recently identified that “While the composition of the [UC] workforce has not changed much from 2014-15 through 2023-24, the most pronounced change has been in the share of managers, which has grown from 7 percent to 10 percent of the total workforce.” In addition, while UC faculty hiring has been relatively flat since COVID, the number of managers employed at its nine campuses that teach undergraduates has growth 26 percent, from 3,266 to 4,122. During that same time, the number of senior professionals working at undergraduate serving campuses increased by 39 percent, from 5,823 to 8,106.

 Partly as an effect of this top-heavy growth, more than half of UC campuses are suffering from “structural deficits”, and they’re making painful cuts to instruction that should focus more on upper management and administration instead.

 

One fix for this lack of transparency would be for the California state legislature to require that all public four-year higher education institutions and their medical centers share their budget models for the 2025-26 school year, and each year thereafter. That way, the state legislature will be able to evaluate in future years whether the money that it allocates to UC and CSU for instruction isn’t diverted and spent in ways that don’t directly serve our schools’ students.

Liner Note 26. the University of California’s Fiscal Crisis

Santa Barbara on December 24, 2023   

In the May Revision of his January budget proposal for 2025-26, California Governor Gavin Newsom cut his cut to the two state university systems. 

 CSU Chancellor Mildred García wrote, “The May Revision reduces proposed cuts to the CSU to 3% or $143.8 million of ongoing funding – down from the 7.9% or $375 million cut initially set forth in the governor’s January proposal.”  UC got the same percentage reduction of the January cut—from nearly 8%, announced a week or so before Trump took office, to 3% now.

 

García went on to note that the Compact continues to exist at the convenience of the Governor and thus isn’t really a “Compact” in the normal sense.  “It’s like the father who announces, ‘I have a compact with my children not to spank them—except when I really need to spank them.” Sorry, I misquote. García’s only comment was, “However, the 2025-26 CSU ongoing multi-year compact funding ($252 million) remains deferred until fiscal year 2026-27 to help address the state’s budget shortfall.”

 

García added, “I commend and appreciate Governor Newsom for taking a thoughtful and measured approach to addressing the state’s fiscal challenges, while recognizing the unique and invaluable role that higher education institutions, and the CSU in particular, play in driving California’s workforce and economy.”

 

Not to be outdone, University of California President Michael V. Drake wrote, 

We are deeply grateful to Gov. Newsom for recognizing the value of the University of California’s contributions to our state in the May Revise. This is a challenging budget year for California, and our state leaders are facing very tough choices. Even in this difficult moment, the Governor has reduced the University’s cut from 8 percent to 3 percent, demonstrating his strong commitment to California’s students. His proposed budget minimizes cuts to vital student support services and preserves critical investments like affordable student housing construction.

 

The top managers at CSU and UC regularly teach their students and the public that Newsom is a sturdy hero of higher education funding.  If you criticize Newsom’s budgets for your campus, you in effect criticize your president, chancellor, and university officials, even though they've already done the maximum.

 

UC’s Executive Vice President and Chief Financial Officer Nathan Brostrom presented the cut-of-the-cut budget to the Board of Regents on May 14th (Item F4; video is from Finance and Capital Strategies Committee starting at 14’30.”  Here’s the summary slide.

Figure 1

 

 

I recommend ignoring the rightward columns, in which we imagine that the state stops hurting UC and turns over a new leaf. This is still very bad news. The ongoing $129 million state cut is oblivious to the cuts tsunami coming from the federal government, in the ten dimensions I outlined in my last post (Liner Note 25).

 

In his Remaking post, “Manufactured Austerity,” Trevor Griffey laid out the history of the negotiations. He noted the injustice of the January plan: 

Budget cuts negotiated in 2024 seemed like a done deal. Then something unexpected happened: new, more optimistic revenue forecasts came in, and the state of California entered 2025 with a projected $363 million budget surplus.

 

The Governor could have proposed to use some of this money to give a reprieve to the UC and CSU systems, or try to sustain the compact another year. 

 

Instead, the Governor’s January budget proposal reduced planned cuts to state agencies, while leaving the 8 percent cut and compact deferral in place for UC and CSU. 

 

The May Revision is a partial correction of that extra cut meted out by the governor and legislature to UC and CSU. But it’s still a cut in the worst year in my lifetime for U.S. colleges and universities. 

 

Where did the Department of Finance and the California legislature get the idea that it would be OK to replace the Compact increase with a $129 million cut?  

 

At Cal Matters, Mikhail Zinshteyn has reported,

The chair of the Assembly’s budget subcommittee on education finance, David Alvarez, a Democrat from Chula Vista, asked UC senior officials how much the state could cut and still leave student academics largely unaffected, including graduation rates and other endeavors that “ensure that student access remains the same.”

 

For UC San Diego Chancellor Pradeep Khosla, the answer was about $30 million, much less than the roughly $73 million in state cuts the campus would absorb under the current plan.  Systemwide, the UC’s 10 campuses could tolerate an ongoing cut of $125 million, said Seija Virtanen, a UC government relations official.

 

Mystery solved. The new cut idea came from UC officials themselves. Khosla told the Assembly Budget Committee that UCSD was cool with a $30 million cut three weeks after he told his campus community that they face cuts of $75-$500 million. Virtanen said a $125 million cut would be tolerable. UC’s cut was $129 million.  

 

The official UC discussions take place in a short-termist bubble in which only the most recent increments are in public view. The repressed pattern is a quarter-century of cumulative shortfalls.  

 

I’ve updated the blog’s ongoing calculations for the UC budget (CSU isn’t here) to reflect the May Revision.  If you’d like more background or a refresher, see “The Essential Charts.”  For Newsom’s funding pattern see “Shortfall.”

 

Figure 2

 

Here you see several lines.

 

The red line tracks the state's actual general fund allocation in nominal dollars.

 

The blue line is a benchmark, tracking growth in state per-capita income.  This measures the strength of the economy as it exists in people's pockets.  It goes up 4-5 percent a year most of the time.  

 

UC enrollment did not stay flat through this period, but increased by about 50 percent. The yellow line takes the per-capita income benchmark (blue line) and corrects it for actual UC student growth. 

The purple line is the California state budget (right-hand scale).  State government--health, corrections, transportation, K-12 education, etc--has grown at around the same rate as personal income.  California doesn't have an exceptional government, measured by growth rates.  It has an average-growth government--except for higher education, which state government has made sub-par.

 

Note that none of this data is corrected for inflation.

 

If a state wanted to fund an agency in an average way, it could use several metrics.  It could increase that agency’s budget at the overall government median.  The red line would track the purple line. 

 

Or it could increase that agency's revenues at the same rate as per-capita income. The red line would track the blue line. (In such a case, the legislature wouldn’t be treating that agency as more special, but just letting UC or CSU or public health or transportation grow with the state.)

 

Or the state could also acknowledge the growth in that agency’s service obligations, like enrollment growth.  In this case, the red line would track the yellow line. 

 

You can see that none of these average treatments take place.  UC’s state general fund revenues have fallen steadily behind the state in all three measures. And UC officials seem not only to be okay with this, but to co-create the substandard increases over years.

 

I’ve never understood why they do this, or why UC people don’t try in an organized way to make them stop. But here we are.

 

The traditional excuse was that UC will made up for state cuts with increases in student tuition. This has always been unpopular with the California public, so the line was that UC is compensating for state cuts by triple-charging international students, and this it’s a win for the state taxpayer.  When the taxpayers’ 4.0 or 4.3 GPA kids were getting rejected in large numbers from the flagship campuses with the highest shares of international students, parents complained, and the state negotiated campus-by-campus caps. Resident tuition got frozen by Jerry Brown (thanks to student protests) in the early 2010s, and the “cohort” tuition replacement makes little revenue difference. 

 

Long story short, if you calculate net tuition income, taking out some big expenses no longer covered by the state, you get this chart.  The green line adds UC general funds and net tuition income to state general funds.

 

Figure 3

 

Any way you slice it, the University of California has been underfunded by the state throughout this century. 

 

After these many years of substandard funding, UC (and CSU) are now woefully exposed to the ax-murdering of federal agency grants. At CUCFA, Eric Hays has calculated (conservatively) a UC-wide loss of $421 million in federal research funds from just one of the ten types of cuts—NIH reductions in indirect cost recovery rates to 15%.  

 

Damage is settling in everywhere. The system has frozen hiring on all campuses, amid various campus measures.

 

I noted above that UC San Diego, Chancellor Pradeep K. Khosla warned of cuts on April 1^st.

We are unable to predict exactly what the losses will be, but our initial scenario planning models indicate possible reductions ranging from $75 million to more than $500 million annually. In preparation, I have asked budget offices to model a 2.5% to 12.5% budget reduction based on these initial scenarios. We will continue to evaluate the data and further refine the range of our estimates.

 

That was the last update on his page.

 

At UC Santa Barbara, the chancellor has asked units to prepare for across-the-board cuts of 10%.

 

UC Santa Cruz already had a $107-111 million structural deficit before Trump’s election, and faces cuts and layoffs.  Students are noticing educational effects.

 

UC Davis was already projecting a doubling of its core funds deficit to $90 million, and now expects further losses due to federal cuts of $118 to $408 million.  The chancellor's statement following the May Revision (h/t Mikhail Zinshteyn) declares a $53 million deficit on tuition and state funds, and a prospective $500 -$907 million deficit adding federal sources at the campus and medical center combined.

 

And so on. 

 

The financial information is woefully incomplete. It doesn’t tie specific levels of cuts to known policy variations.  There are no “bridge funding” policies of the kind I discussed in Liner Note 25. There are no elements of a coming plan. 

 

Researchers across the system engage in pure guesswork trying to figure out the near future of their research and of their students and staff. What kind support institutional support might they have? Nobody knows. 

 

This atmosphere may explain why the chair of the Santa Barbara division of the Academic Senate resorted to writing, “I like to think that the temporal rhythms of institutions—which can admittedly be frustratingly slow, particularly in relation to the frenzied pace of the news environment—are ultimately going to be our best defense.” Perhaps that’s the function of opacity too: the psychic defense of knowing little and thus having a reason never to be ready with a large and possibly successful counteraction.

 

Pressure seems to generate many bad ideas on high.  Faculty have had to spend time this year opposing ideas like converting the 7 quarter-based UC campuses to the semester system (look at the work already poured into this), or UCOP forcing universal adoption of root-level surveillance software on all UC computer hardware without consultation (this UC Irvine Senate resolution against the plan passed with a 94.9% yes vote). 

 

Unquantified, undebated budget calamity is also behind serious challenges to UC’s educational core. At the UCLA Faculty Association blog, Dan Mitchell summarized part of EVC Darnell Hunt’s commentary like this: 

 

After the student-worker strike a couple of years ago - which boosted labor costs - and given the current outlook of reduced federal and state support, the number of PhDs UCLA can train is being re-examined. The job outlook for PhD graduates has also been diminished by federal policy. Some departments in the past created sections staffed by PhD student TAs in order to support those students. Now only needed sections will be staffed. And UCLA is looking at whether even needed sections might be replaced by such tech alternatives as AI and remote/hybrid classes.

 

Hunt is suggesting a major shrinkage of UCLA’s doctoral programs, which will make undergraduate majors unteachable, which would require conversion of a large share  of instruction to online or “AI” instruction. Some unknown large proportion of graduate students would disappear, and undergrads would have college on their phones. 

It’s hard to imagine a better way to dismantle the UCLA product and brand--not to mention knowledge creation and public benefits.  And yet there seem to be private talks going on about this at senior levels. 

 

None of these budget disasters are acceptable. I hope more people will fight them furiously.