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

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

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

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

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

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

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

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

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

The Real Covid Budget Crisis

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

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

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

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

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

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

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

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

Budget Idealism at the UC Regents

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A Plausible Scenario for 2020-21

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

The assumptions:

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

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

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

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

The Governance Problem

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

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

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

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

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

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

Should university officials be fatalistic about Covid-powered cuts to their core educational budgets?  Or should they work 24/7 on their state governments to keep their current budgets whole?

What about state governments? Should they cut higher ed yet again, as various governors are doing (New Jersey, Ohio), and as Gavin Newsom proposes in California?

This post investigates the budget case for a zero-cuts policy.  If your state's public colleges and universities have an ample base budget, you can make some temporary cuts to their state funding. If they are already bare bones, further budget cuts will cut educational quality.

0. Why The History?

There are lots of ways to use numbers as proxies for teaching and research quality.  Most are bad. A pretty good one for teaching is instructional expenditures per student. To help state governments understand quality, departments could establish a set of minimum practices, then cost them out.   Campuses could figure out what their budgets must be to meet these standards. But departments haven't been invited to build the budget that would meet their needs.  And the averages for instructional expenditure that have been used by my case study here, the University of California system, aren't reliable.

Instead, I'll use historical budget trends as quality proxies.  I do this for two reasons.  First, the history of the state's relationship to UC controls what the state thinks UC should have.  This is a strained history and it still matters.

Second, UC's budget history expresses the idea that public universities could and should be as good as elite private universities.  Public university students should be roughly equal to private university students. The same was to be true of their faculties.

Historical budgets expressed this aspiration for equality through public quality.  A detailed Senate report I co-authored identified this proxy for full quality as UC's 1990 budget. Strong budgets expressed the quality aspiration in reality as well as in theory.  For example, previous, higher levels of public funding for UC campuses had enabled most of them to become members of the American Association of Universities, a group of North America's strongest research universities. Nearly all did this while tuition was still very low and with negligible per-student endowments.  This taught an important general lesson: Great academic quality came as readily from public support as from private capital.

Quality wasn't just about prestige, but also about social effects.  Public universities were to educate students as well as private universities did.  There were always resource differences (though not today's resource abyss), so let's put it this way: students were not to have to accept lower cognitive benefits from their B.A. by getting it from UC Irvine instead of from Occidental College.  UCI students had more courses in large-lecture format, so UCI had also to be able to afford lots of small courses too.  Occidental College seniors could write a thesis that taught them how to produce as well as consume knowledge.  So UCI had to offer undergraduate research experiences.

The same was true in research: major public universities were  to be as good as the elite privates (Berkeley and Stanford, Urbana-Champaign and the University of Chicago, Chapel Hill and Duke, Rutgers and Princeton, etc.).  Public university doctoral and professional degrees needed to be roughly comparable to private university degrees--or at least not in different leagues. The idea was to have proverbial world-class research going on at several hundred research universities rather than mainly at eight Ivy League universities and another dozen or so wealthy equivalents. Public universities needed plenty of internal funds to support research.  It was a national priority to have millions of really good thinkers and hundreds of really good research sites. The dominant political culture assumed that these two things--widespread intelligence, abundant research--were essential for democracy, progress, and justice.

So to put the large public system on a clearly inferior resource tier was understood to be economically suboptimal and also unjust.  This was particularly clear in the wake of civil rights movements as economic inequality grew and many K-12 school systems became minority-majority--while generally giving the least funds to districts with the highest shares of Black and brown students.

How are state legislatures doing with keeping public universities in the mix? Here are some charts to show what's happened in California. They come in three sections: UC Core Revenues, the State's Point of View, and What UC Really Has Left.   They track funding from the turn of the century.

1. UC's Core State Revenues

Figure A looks at what's happened to the state's allocation to the University of California.  This is money that generally follows resident students.

In Figure A you'll see 3 lines. 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.  If a state wanted to fund an agency in an average way, it would make that agency's revenues rise at the same rate as per-capita income. In such a case, the legislature isn't treating it as essential or special, but just letting UC or CSU or public health or transportation grow with the state.

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

The red line tracks the state's actual general fund allocation in nominal dollars, not corrected for inflation.

Figure A: State Funds for UC in Nominal Dollars, Compared to Per-Capita Income Benchmark, and Benchmark Corrected for Enrollment Growth

The story is clear. The state's allocation to the University of California fell far behind state income growth.

If UC's state funding had kept up with state per-capita income (blue line), its 2019-20 allocation would have been $6.6 billion--not the $3.7 billion it actually got.

If UC's state funding had kept up with this benchmark corrected for 50 percent enrollment growth (yellow line), its current-year allocation would be $10 billion--nearly 3 times more than it received.

Sometimes people explain this low state allocation by saying the state population just doesn't have the money. That's not true.  The state population had the money to spend on higher education, but spent it elsewhere.  2017-18 was the first year that UC got a higher state allocation than its allocation in 2001-02 ($3.28 billion).  (2007-08 was the sole exception, at $3.39 billion.)  And remember that these nominal dollars don't reflect cumulative inflation, which has been around 46 percent.

In other words, for twenty years, the State of California has gotten all UC enrollment growth and all of its cost increases for free.

On to another chart. Sometimes people say, "well, the whole public sector has been falling behind."  That's also untrue.

 Figure B: Adding California State Budget Growth to Figure A

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 held down below other agencies.

2. The State's Point of View

State officials will often say that Figures A and B are misleading because they leave out UC's other revenues, especially tuition.  The state has in the past claimed that student tuition is actually state funding.  The more plausible claim is that UC tuition hikes have offset state funding cuts.

In a January 2013 UC Board of Regents meeting, a state official made the point this way:

The possibility of increased funding right now: it doesn't exist. . . .There is no significant amount of money to backfill previous cuts. We've made roughly $900 million in cuts and you've increased fees $1.4 billion dollars. The [fee] increases were disproportionate to the level of disinvestment by the state. 

He was accurately using Department of Finance data to say that UC had $500 million more in gross tuition revenue than the amount of the 2011-12 cut.  The official was state Assembly Speaker John A. Pérez.  Pérez, who helped install the UC tuition freeze, now serves as chair of the UC Board of Regents.

To represent the state's understanding, Figure C adds a green line that shows UC core educational revenues.  These are about a quarter of UC's total budget (no medical centers, auxiliaries, or extramural grant funding ("direct costs").   The main revenue sources are state general funding, but now with various kinds of tuition added in (resident tuition, non-resident supplemental tuition, abbreviated as NRST, which mostly international students, and also the state funds that go to UC via the Cal Grants program that eligible students use to pay some of their tuition.  1/3rd of gross resident tuition is "return-to-aid," meaning that it cannot be used as operating revenue because it is converted into financial aid. There's also some indirect cost recovery funds and other bits and bobs that the core uses.  Take a look.

Figure C: UC Gross Core Revenues, Including Various Forms of Student Tuition and Related Funds

The green line is a lot better than the red.  UC gross core revenues grow faster than the income benchmark. Core revenues (mainly state funding plus various tuition streams) do a somewhat decent job of keeping up with enrollment growth at the benchmarked level (the yellow line).

You might be wondering about the widening gap between the yellow and green lines in recent years: it reflects the "surge" of unfunded or underfunded resident students the state forced UC to take to make up for the previous growth in non-resident enrollments.  This is a key source of the deficits many UC campuses were projecting even before the SARS-CoV-2 pandemic.

So here, it looks like the state has a point. UC's educational core has much better revenues than the state general fund calculation (Figures A and B) suggests.

This does not change the fact that the state has been free-riding for growth and upgrades on students (via their tuition), and also on other UC revenues.

But it looks like UC's gross core revenues have at least kept up with state income growth, and slightly beaten inflation.

3. What UC Really Has Left

Here's the problem with the state's point of view: while it was cutting or eroding the general fund allocation, the state also decided not to pay for lots of other things. The two biggest unfunded costs are (i) capital projects and (ii) that part of total compensation known as the University of California Retirement Program (UCRP).

In contrast to previous practice, UC now has to build its own buildings with a combination of University-based borrowing, private donations, and internal operating revenues.  This is the case both on the campuses and at the medical centers.  The state acknowledged the situation with legislation, AB 94, that allows campuses to use state funding to pay interest on debt.  That isn't additional money, just permission to use existing funds for debt that the state used to pay.  Three familiar symptoms are chronic student overcrowding, inadequate office and research space, and campus disrepair across the UC system.

The "pension holiday" from 1991-2010 was also a payment holiday for the State of California, which saved many billions of dollars over the years.  The state is the only beneficiary of that ill-advised break that has not started to make payments again.  Thus the employer contribution to UCRP comes out of UC operating funds as well. 

Figure D deducts employer pension costs and capital projects costs from UC's gross core revenues. There are many ways to calculate both, and I tried nearly all that I could think of, in consultation with several other longtime budget observers.  This figure uses a UCOP report (without the underlying data) for UCRP costs (Display XIX-6, p 159).  Capital projects costs were based on campus-by-campus calculations of operating revenues allocated to capital projects in each individual year.  This variant, Figure D, shows the highest net revenues of all the methods, so you should see it as a best case for the state's funding practice.  Watch the green line.

Figure D: UC Net Core Revenues (Core Revenues with Endowment Revenues, minus Employer Share of UCRP Contributions and Campus Funds Used for Capital Projects)

Most of the tuition revenue gains in Figure C are canceled by the state's withdrawal from capital projects and by its non-contribution to pension costs. UC revenues have not kept up with the income benchmark.  In some years, net core educational revenues are close to the flatlined state general fund allocation.

The University of California comes into the Covid crisis with net core educational revenues that are well below historic quality norms.  There's no educational surplus lying around to cut.

 4. The Insufficient Base for 2020-21

The anticipated Covid state cuts would be the fourth major round since 1990. But these would be the first without UC's traditional revenue rescue, large tuition hikes. (Existing UC reserves are a separate matter that are outside my scope here.)

The first time the big cuts came, University of California officials saw them as a one-time event.  That was 1992-95.  The second time the state cut general fund support for UC and CSU, UC had a plan, which was large tuition increases.  That was 2002-5.  The compact the two systems signed with Gov. Arnold Schwarzenegger, in 2004, didn't just permit tuition increases of 7-10 percent each year, but required them.

The third time state cuts happened, 2008-12, the high tuition plan was in place.  But high tuition didn't make it through the cuts cycle.  The student protests of fall 2009 and then again in fall 2011 effectively ended tuition increases on resident undergraduates. Jerry Brown removed Tuition Plan A, tuition hikes on resident undergraduates. UC then refocused on Tuition Plans B and C: increasing non-resident supplemental tuition (NRST), especially by taking more international students, and growing Self-Supporting Graduate and Professional Degree Program tuition, where UC academic units create for-profit (mostly masters) programs that can charge high tuition to residents and non-residents alike. The regents capped Tuition Plan B in 2017, and Plan C does not generate enough net returns (net of labor and facilities costs, often uncounted) to serve as a revenue fix.

As you can see in Figure D above, UC's net revenues have stagnated for 20 years, have not kept up with the income benchmark, and are far behind enrollment growth.

State cuts and quiet general fund erosion have already lowered UC quality. They have lowered it specifically for the most economically and racially diverse population in California memory.  Sacramento's funding practice gives much less per-student educational funding to today's students-of-color majority than it gave to their majority white predecessors a generation ago--even after we count revenues from tripled in-state tuition.

This losing battle has taken place in a state that has seen one of the most intense accumulations of wealth in recorded history.  We don't expect Google and Apple to support high quality higher ed for all. But we do expect state government to do that.

Any state revenue cuts now will directly cut UC quality again.  This time, the damage may be irreversible.  State government must now reverse the chronic underfunding policy of recent decades. It must keep UC (and CSU) whole for the sake of the state.

APPENDIX

Figure E: Version 2 of Figure D--UC Net Core Revenues (Core Revenues with Endowment Revenues, minus Employer Share of UCRP Contributions and Campus Funds Used for Capital Projects)

Many thanks to Minh Hua, the RA with inexhaustible spreadsheet stamina.

Its a simple story, as budget stories really are.

In 2019-20, the University of California received $3.724 billion of its revenues from the Golden State. That was a bit under ten percent of UC's gross revenues, budgeted to be $38.394 billion.  "Core" revenues on the campuses are about a quarter of that. The rest are medical centers and revenues from auxiliaries like housing.  That means that state general funds are about 40 percent of UC's educational core.

In November, the UC Office of the President got the Board of Regents to ask for an increase.  The base increase was a bit over $264 million.  Throw in some other line items, like paying for undergraduate enrollment growth !!, and you had $447 million in requested increases.

It looked ambitious, but it wasn't, for reasons of withdrawn one-time funds, etc.  It was a treading- water budget. Most campuses were already projecting structural deficits in a couple of years, even after years of good-pupil pursuit of non-public revenue streams like international students and for-profit masters programs.  The system projected a deficit as well. Base conditions on the campuses have long been bad--a whole concealed story in itself--and these increases kept this status quo.

This was  too rich for Gov Gavin Newsom.  In January, he offered UC half of its request - $217 million. It was a deed of anti-chivalry I heralded in my budget poem.  Then Covid-19 arrived and swept across the land.

Like every other university, and like every hospital system, UC took massive hits. Half were to the medical center, and half were to the campuses, more or less. The campuses had big losses in housing and dining as those were mostly emptied out. UC hospitals emptied beds and other facilities expecting a Covid-19 flood.  Long story short, UC projects total losses of $2.7 billion -- by June 30, 2020, for the current fiscal year.  Teresa Watanabe's story in the LA Times was rightly titled, "UC Reeling Under Staggering Coronovirus Costs.'

The current best case, the thinking goes, is that Covid-19 disrupts UC through Fall 2020 but then normalcy returns. 2021 would then be a fairly normal year-- face-to-face instruction, laboratories at full throttle, much higher cleaning, testing, tracing, and monitoring costs but also normal revenues.  In this best case, UC assumed a no-cut state budget.  If the state held firm, losses would be only another $4.4 billion or so for 2020-21. They would come from lost non-resident tuition and various Covid-19 expenses in the fall (testing, temporary classrooms for social distancing, etc.), and not losses from the state.  UC would be out $7 billion or so from March 2020 through end of June 2021, but could possibly cover that with borrowing and additional stimulus funds--emphasis on possibly. That was still at least a 10 percent loss for 2020-21--as the best case.  And it depended, to repeat, on a flat state budget -- neither the $447 million nor the $264 million increase, but merely a $0 increase for next year.

$0 was too much for Gavin Newsom. He has now come back again with another cut. Rather than just under $4 billion for UC, in the already-reduced January offer, Newsom proposes $3.369 billion, down about $629 million, a cut in the state share of 15.72 percent.

This pushes the best-case 2020-21 losses (on the January budget for that year) to more than $5 billion.  I'll put this another way.  About half of the $4.4 in losses were on the campuses--around $2.2 billion.  Newsom's cuts have just increased UC's core campus loses by nearly 30 percent.

States are supposed to help their major public systems, not disable them.  California forgot this long ago. It has forgotten this most completely with the educational pillars of its storied knowledge economy.

Sacramento looks for the cheapest deal, and it has gotten it with the University of California.  Newsom's new general fund figure, around $3.4 billion, is about what the state gave UC  in 2001-02, two decades ago.  Since then, inflation has run 46 percent, and undergraduate enrollments are up 52 percent.  A flat state general fund share for UC, reflecting both, would be $7.8 billion next year. Newsom has decided UC isn't worth even half of that.

In effect, the state is planning yet again to do serious damage to UC quality.  Research, doctoral education, undergraduate education, and their basic infrastructure have not recovered from the 2008-11 cuts, and the governor proposes to hit them again.

I'll just pull out two major issues.  UC doctoral students are the backbone of UC teaching and research.  Those in private housing need a COLA to afford rent in most UC locations. Where is that money supposed to come from when the UAW contract is renegotiated?

Secondly, racial disparity.  Undergraduate graduation rates vary by race: the 4 year rates are 54/57 percent for African American and Latinx students and 73/76 percent for white and Asian American students.  This is the most rudimentary quality measure--not what did you learn, but simply did you finish--and yet UC lacks the funds to achieve racial parity in basic grad rates.  It costs money to (a) make up for weaker preparation coming from California's de facto segregated high schools (many lack 2nd year algebra or calculus, for example); and (b) give enough financial aid to keep poorer students from working too much. State cuts = more racial disparity, plain and simple.

Think of the difference between Newsom's $3.4 billion general fund offer and the inflation-enrollment corrected amount UC should have, $7.8 billion, like this.  In 2001, Underrepresented Minority (URM) students were 16 percent of UC's undergrad population. This year, they are 29 percent.  The state now invests half as much in a student body with twice the share of black and brown students.

Everyone decries this textbook structural racism--the Regents, the governor (p 48), and every liberal Democrat who also does respectability politics by saying there must be "sizable reductions in services", or saying, "a hand up, not a hand out."  Herbert Hoover would be proud. If Democrats don't want racial disparity, they should stop producing it with austerity, as though Keynes never lived, the New Deal never happened, civil rights were a chimera, and stimulus funding didn't actually build the country.

It's economically illiterate for California Democrats to revive Hoovernomics when it will hurt the most. The legislature should reject Newsom's cuts to the state's core systems.

UPDATE 5.19.  Yesterday, UC president Janet Napolitano announced a pay freeze for "policy-covered staff employees," 10 percent salary cuts for her and the campus chancellors, and the continuation of ladder-faculty merit reviews (the coded language here will need careful parsing, and will probably be implemented somewhat differently on the various campuses).

Towards the end, she noted,

From mid-March through April alone, we estimate that systemwide financial losses totaled nearly $1.2 billion, and we anticipate these losses will continue to climb in the months ahead. Needless to say, this significant loss of revenue is having an enormous negative effect on our budgets. Additionally, Governor Newsom last week announced a revised State budget for 2020-21 that includes a 10 percent funding reduction for UC of $372 million.

Newsom's May cut takes UC down to $3.369 billion.  Why does Napolitano describe this as a ten percent cut for 2020-21, not 15.72 percent?  It depends on how you count. It's a

• 10 percent cut from 2019-20's general fund appropriation of $3.724 billion.
• 16 percent cut from Newsom's January budget proposal (see Dept of Finance)
• 20 percent cut from the UC Regents' November budget proposal (of $4.228 billion).

With a 20 percent cut, Newsom joins Arnold Schwarzenegger and Jerry Brown in the 20 Percent Higher Ed Cuts Club.

I don't know why Napolitano is minimizing the size of the state cut, making it seem like half of what it actually is when compared to the University's official request in November.  That November request was not large enough to make UC solvent (second budget slide here): many UC campuses were projecting deficits on its basis.  Add in the non-state revenue losses and UC's 2020-21 is an unprecedented budget disaster.

Here's an act of self-harm that is spreading from coast to coast. Stanford University is "pausing" all faculty searches. "Provost Drell will permit hiring processes to continue if 'discussions have taken place with the finalist about terms of the offer,' or if a formal offer has been extended to a candidate for a faculty position, but any pending offer for a staff position must be put on hold immediately.  On August 31, 2019, the end of the university’s fiscal year, Stanford reported its endowment was $27.7 billion."

That's the author's sequencing, not mine. Drell is tossing out a lot of faculty time and effort, for starters. She's throwing people who almost got jobs back into a terrible job market. And for how much savings--one year of payroll for how many new faculty?  Unknown.  (Update: On April 1st, UC Berkeley announced their own hiring freeze, counting $100 million in covid-related costs, on a $3 billion base).

Another example, from Brown University at the other end of the financial spectrum.  Their provost   is not canceling searches already "well under way," but has frozen future hiring other than "a very few critically strategic hires in the year ahead."  A number of very wealthy elite universities are following suit (Emory, Columbia, Penn . . ): see Bryan Alexander's growing spreadsheet and also this very long one.

Here's a third case, from a state system with 23 campuses and over 450,000 students.

 "All open searches are to be stopped"-- unless the top 2 campus officers agree that it's "vital." They are now the sole originators of searches, "if they deem it necessary." How many searches are cancelled--hundreds across all  campuses? We don't know.

Translation for all three, and the other freezes  now occurring: "we expect the ship to take on water in the coming storm.  So first we'll throw early career researchers overboard."

Note two other features. These senior officials don't offer financial modeling to explain or justify the freezes. Second, these are top-down decisions, devoid of shared governance. They identify no consultation with the units affected. A full range of operational answers aren't produced. What will this do to your major? to your students graduating? to their learning? to department functions? How will this affect your research, short, medium, and long term? What does this do to your doctoral program? How does it affect doctoral education in any particular discipline. There's no information.

Academia has long let financial factors dominate or simply ignore educational ones, to the long-term detriment of education. Administration becomes a transmission belt in which a crisis in the outside world immediately becomes a crisis in the institution. In addition to hurting education, this kind of management robs the institution of agency. It also fails the essential public job of countercyclical actions that resist the cycle of  shutdown--consumption crash--job loss--no money--more closures.

But wait, you say, this is the Great Depression 2.0.  3.3 million new unemployment claims last week, all sorts of back-of-the-envelope fun being had by Fed economists, etc.. Shouldn't the funding collapse override all other factors? 

No. Hell no. A thousand times no.

Managers must always think about the welfare of their whole institutions, which means considering multiple factors when allocating funds. In this case, that includes how a cut or a freeze will affect

1. immediate institutional solvency
2. long term institutional solvency
3. the university's immediate operations, like teaching and research
4. the university's long term operations, like teaching and research
5. university personnel (sunk effort, effectiveness, fairness, morale, continuation, recovery)
6. the disciplines represented in the university
7. the overall profession of college teaching and research

That's a short list, and you can see an item like (5) can be broken out into many parts. The items at the top are not more important than the rest.  Managers don't really get to pick one or two of these and ignore all others  But that is what Provost Drell and Chancellor White et al. are doing: only getting to (1) or (2) on a  long list, and not to the rest--to impact on courses, curriculum, departmental health, student access, success, food and housing, not to mention the continuity of the professions that keep universities alive.

Drell and White aren't to blame for the defective managerial culture in higher ed nationally, but they are enacting it here. Universities have long dealt with present fiscal crises by sacrificing the future: in addition to their epic passages of deferred maintenance and the like, they have addressed chronic financial shortfalls by hiring temporary faculty rather than permanent ones or by hiring no new faculty at all.  They have not invoked items (3) through (7) above and said to their legislatures, governing  boards, senior managers, wealthy donors, etc., "we cannot offer quality instruction, which in universities always includes a research dimension, by adjuncting more than X percent of our faculty."  (X was traditionally 1/3rd averaged across the sector.)  They have not said this. The long-term results have been

• massive shrinking of the tenure-track job market
• destabilization of doctoral study (doing intellectual as well as personal damage)
• transformation of advanced study into precarity
• endangerment of the quality and continuity of academic disciplines

Management is an intellectually challenging practice, at least when done right. And doing it well is crucial to the health of academic life. Although I'm very aware of the university's many negative legacies and practices, I'm also an institutionalist, a bit churchy in my sense of the value of universities as intricate and animating systems. I also grew up on Michel Foucault, who, for all his pessimism about the deployments of law, rights, and liberal institutions to impose rather than check power, saw sovereignty as partially replaced by governmentality, in which various powers engaged in the disposition of all the elements of a system, in some kind of efficacy.  I have a lot of respect for the difficulty of the administrative job and for people trying to do it well.  But that is not what is happening here.  Managers are now getting set to wreck another academic generation, having failed to rebuild the public university employment base after the last big crisis in 2008.

A few concluding policy thoughts:

• Tenured faculty need to bring this repeated sacrifice of the rising academic generations into the sphere of institutional politics.  This means strong objections to pauses, freezes, closures, and future downgradese.  We need to fight this, and design alternatives. 
• Universities must demand new federal stimulus funds-- beyond the $14 billion (on a nearly $60 billion request) that POTUS signed last week--specifically to maintain the academic workforce. See Michael's post for context and argument. Another giant federal stimulus bill is going to have to happen in the next few weeks. The main point of stimulus funds is sustaining employment.  Given the employment crisis in the society at large, universities should be increasing hiring and trying to employ more people, to ease the pressure on other sectors. Universities should use the crisis to absorb unemployed PhDs from former years and put them to work in the jobs these graduates of our doctoral programs sacrificed years of their lives to do.  More tenure-track employment will also upgrade instruction such that the undergrads we've sent home are more likely to come back. See MLA Executive Director Paula Krebs' excellent short piece on this topic.
• The federal government should allocate bailout funds to universities only on the condition that they reverse hiring chills and freezes, maintain their workforces, and try the countercyclical economic work of expanding them.

We don't need another massive hit to a higher ed system that was already weaker in 2020 than it was in 2008. We can't take another bloodbath in the academic job market. We need a New Deal for higher ed, starting with the doctoral job market.

John Warner describes the catastrophic cuts to the University of Alaska as a swan song. The term suggests the end of a model, with a new model to follow. It's easy to be pessimistic about this.  Two economists from the UA-Fairbanks campus do a good job of telling Washington Post readers about the cuts' fiscally-unnecessary destruction. But they sound resigned.

We may default to the idea that an anti-government era is dying, but the new one is helpless to be born.  In fact, the new era is here, but we aren't giving it the help it needs to emerge.

That help includes recognizing that the 41 percent cut to the Alaska university system comes from a political script developed in the 1970s and perfected in the 1980s.  The script is a classic: the candidate buys votes by promising to give away public money.  Two 1970s and 1980s innovations were especially important.  First was the Reaganite claim that the real corruption was to let the public sector keep its money (government was waste, fraud, and abuse) while tax cuts (or Permanent Fund Dividend --PFD- increases, Alaska's version), restored money to its rightful owners.  Second was the construction of an implementation machinery-- a skilled, disciplined cadre of unknown technocratic operatives whose faceless previous deeds would not be subject to empirical assessment and accountability.  The combination of free money and operational obscurity will keep working, regardless of the opposing ideas of  Elizabeth Warren, Bernie Sanders, and a generation of debt and precarity sufferers if the general public--starting with academics--doesn't get involved in public budgeting.

I know less about the Alaska governor than I do about his newly-imported budget director, but it looks to me like maiming the state universities is the way Dunleavy can set himself up as the next Scott Walker by competing in a national Republican party gang initiation that requires the dead bodies of a few public services run by the liberal professions (teachers and caregivers bad; police good).  The hunter-teacher-principal with the Native wife is now working with a Koch brothers organization (see also a PR Watch report) and has gotten himself the national headlines that he couldn't have without causing a lot of pain.  He's made efforts to suppress public debate.  Still, he can't do it by himself--he needs at least one trained operative with unwavering ideological commitment who can seize governmental control points to awe the voters with overwhelming force.

That operative is Donna Arduin, pictured with Gov Dunleavy above.  He brought her to a state who had never heard of her before this spring--video of her first budget hearing starts with the committee chair cajoling her repeatedly to say a couple of things about who she is because nobody knows.  She finally said she has worked for seven governors in six states.  What she didn't add is that they were all far-right Republicans who were devoted to advancing their political careers by breaking government and giving its money to supporters. She started in Michican in the early 1990s with John Engler, who accelerated that state's downward slide, and worked for Jeb Bush and Marco Rubio in Florida.  She was then dispatched to California, where she helped a governor whom we all remember well.

She more recently worked as "rent-an-axe" for government hater Gov. Bruce Rauner in Illinois, who sowed chaos in part by holding the higher ed budget hostage for months at a time. 

Arduin was a central player in implementing Arnold Schwarzenegger's version of the far-right fiscal playbook.  The starting point is always to create a crisis. First, as noted above, claim current tax levels reflect waste, fraud, and abuse--an unjust taking of personal property like the Vehicle Licensing Fee in California or a reduced PFD distribution in Alaska--and promise big cuts.  Arnold waved brooms and knives to prove this point.  Second, repeat a fairy tale in which the same or better services--the legit ones--can be had for less tax money, along with more prosperity and jobs. This was the task of the "Laffer Curve" of Ronald Reagan fame, in which lower tax rates allegedly produce more business and therefore higher overall tax receipts, so the cuts pay for themselves and all the government stuff you want is still in place.  (Republicans used this line to demobilize opposition to their trillion-dollar tax cut for corporations and the wealthy in 2017.) Third, once you've won election with these paired claims, follow through with the large tax cut you promised, creating a sugar high in the base while also blowing up the budget deficit.  Fourth, use the big deficit to make huge destructive cuts, ideally big enough to change the agencies permanently.

The playbook can be modified while keeping its basic structure. Alaska is a great test case.  It is the third smallest state by population, and for several years has been getting smaller.  It has an extraction economy that depends on the price of oil and gas, and these prices are down from their previous highs.  The state government is dependent on extraction taxes and fees for 85% of its revenues, and now has a deficit that needs to be covered.  It sounds like a good opportunity to drown some government.

Unlike other states, however, Alaska has a Permanent Fund that normally gives a couple of thousand dollars annually to every Alaska resident. In normal years, it partially offsets an elevated cost of living. This fund is currently valued at over $65 billion.  The previous governor cut the divided to use the rest to cover the state deficit.  Dunleavy could continue this policy until oil prices rise again.  He could raise taxes (the current total per capita AK load is about a half of Washington state's, and there is no sales, income, or property tax, so there's some headroom). Dunleavy wears his love for Alaska on his sleeve, so he could use also use PFD to address Alaska's college completion problem (it is 49th of 50 states, page 6), double Native college attendance rates, and similar things that might help move the state away from natural resource dependence.  Dunleavy could have ambitious goals and he has many fiscal options. In the real world, there are always many options. How, then, to get a crisis that can eliminate all options except for massive, destructive cuts?

With the Playbook. First, say the government has had its hand in the people's pockets: promise to restore the Permanent Fund Dividend to its statutory amount-and top up the shortfalls from previous years.  A local TV station made a handy graphic:

Second, say using a third of the PFD reserve in one year (with no new taxes) won't hurt a thing-- health care, schools, universities, ferries, law enforcement, etc.  At Reporting From Alaska, Dermot Cole has a good list of all the cuts Dunleavy promised not to make.  When people respond, well if you're going to spend less on government you'll have to cut something, invoke efficiencies and consolidations--or just make some bullshit up, like Dunleavy did.  He claimed that the state is spending $200 million on jobs that are "funded but not filled," and that there's thus $200 million is savings to be plucked from a tree. (He also trusted that voters are dumb or lazy enough to believe that the state cuts hundreds of checks every two weeks for jobs that don't have people in them.)  Third, once you're elected by promising voters free, painless money, give away public money while refusing to raise taxes.   Fourth, rather than admitting your plan was either dumb or evil, use the deficit to cut everything massively, particularly higher education.  Look familiar?

This is where Donna Arduin comes in.  She is a seasoned pro at seizing control over multiple agencies through a technical rhetoric of process optimization.  Her presentation began by announcing that she had centralized budget development in her office, which meant taking it away from the various state agencies who had long built and submitted their own budgets.  She didn't spell out the obvious implications; operating agencies lose control of their own budgeting, and their local knowledge is purged from the process. Having been in the state for a few weeks, Arduin captured the process and replaces its situated assumptions with her own.

Her assumptions are far-right boilerplate: the public sector is straight waste, all regulation hurts business, only the private sector creates value, government activity should be privatized, its services are for moochers.  One rare press investigation of her assumptions, by a newspaper in Saratoga, Florida, found that they invalidated a consultancy report's conclusions even in the eyes of the Republican politicians who had hired her.   Her goals are always the same, and her means entirely predictable.

I reported almost ten years ago on one of Arduin's impacts in California:

When Arnold Schwarzenegger became governor in 2003, in the middle of yet another three-year reduction in state higher education funding, his budget director, Donna Arduin, privately told university leaders that she would push for continued state funding cuts to force the University of California and the California State University to implement major hikes in tuition. Arduin got much of what she wanted. Partly inspired by fear, university leaders signed a “compact” with the Schwarzenegger administration that built in 7–10 percent annual tuition increases between 2005–06 and 2010–11. This meant that tuition would inevitably rise at two to three times the 3–4 percent increases targeted for state funds. 

Arduin was in California's Department of Finance for less than a year, but UCOP never fully recovered.  They got scared off talking about rebuilding public funding to restore or improve quality.  Now, after years of tuition freezes, they build state requests around promises to generate an extra 20,000 degrees or so per year for a decade, which will consume any new funds and more. The Arnold-Arduin shock doctrine has locked in privatization and stagnation.

Now it's deja vu all over again: "Alaska University System May ‘Never Recover’ From Governor’s Budget Cuts, Leaders Warn." Those leaders are right.

In the middle of various state chopping jobs, Arduin formed a consulting firm with curvemeister Laffer.  One of Laffer's main clients was the far-right Kansas governor Sam Brownbeck, who, following the script, promised that massive cuts in taxes and government would rocket the state economy into a new age of riches.  Laffer helped Kansas refute his own theory yet again.  Tax cuts did not stimulate business investment, job growth, and tax receipts.  They gave investors and businesses windfall revenues.  Along the way, the Brownbeck-Laffer crew raided state reserves to try to hide their failure. Brownback's Republican legislature finally reacted to the giant hole he blew in the budget by revolting against the model in 2017, after it was too late: Kansas will be digging itself out for years and years.  In June, to honor Laffer's lifetime achievement with wrecking governments, Donald Trump awarded him the Congressional Medal of Freedom.

The playbook is always the same.

How do the Charlie Browns stop running for the anti-tax football?

Through a few things:

--Remembering what happened to the ball last time.  This means history and journalism, in circulation.  The short AFL-CIO video I linked to is a good example of user-friendly critique.  There needs to be serious, consistent coverage of the actual results of hatchet-people like Arduin--of what they have actually wrought.  And when coverage does happen, people need actually to read it.  Reading articles will help people like this guy, who, living on an island, was surprised that Dunleavy cut the ferry system after promising not to cut the ferry system.   Dude, you seem to have missed the last fifty years of American politics. But one article can bring you up to speed.

--Massed theoretical assault on the stupid theory that government produces no value-- is a dead weight except for people that need handouts.  The stupid theory has all sorts of social and ethical problems--it is grounded in racism and sexism, for starters--and gross political bias.  But it also needs to be shown to be factually wrong, across the full range of cases, and those results need to be distributed.  In reality, public goods are the majority of value in a society, and make private production possible.  In Alaska, as elsewhere, public goods are the main, really the sole source of decolonized resource use, racial justice, sustainable environmental policies, and progress in human welfare.  Bankrupt far-right economics needs to be replaced with a completely different model.  The work is underway, but it needs to go faster.

--Confrontational, persistent political pressure on politicians like Dunleavy to stop lying.  His fiscal claims during the campaign were fraudulent. They should be described as such, in the same way that journalists can now write sentences like "Today Donald Trump falsely claimed that . . ." The big lovable bear of a man dodged and weaved and minimized and evaded and lied his way through the campaign.  He should have been pressed hard then.  He continues to lie about the non-effects of his cuts -- "we can't continue to be all things to all people," or "it will be tough for a while but we'll get through this."  Call him out.  Raise the political cost of lying to people's faces over and over.  Only then will it will happen less often.

--Progressives are also going to have to bite the bullet and fight for mass scale budget literacy.  Budgets are a dominant language of political life.  Public systems and choices are more complicated than they were in the heyday of the party system, and people's educations haven't caught up.  Nor have their desires to educate themselves about how public money makes things happen. Not knowing that Dunleavy's budget vetoes would wreck higher ed, ferries, some forms of health care, etc. is a form of entitlement.  Not guessing that his evasions meant cuts know is a kind of privilege.  You sometimes hear leftists patronizing people who can "follow the arithmetic."  Well we can stay dumb about budgets--and stay Charlie Brown.

But nobody has to.

UPDATE

On August 13, 2019, the governor of Alaska and University of Alaska officials announced a deal to reduce the budget cut by about half, and spread the cut over three years.  The University president made the mistake of calling this a "pivot to the positive," when it may well have been the cut Gov. Dunleavy wanted from the start.  The Board of Regents did lift their Declaration of Financial Exigency, which was excellent news for UA employees. Dermot Cole gets behind the news coverage: on August 16, he pointed out that, "There is no hint in the so-called compact that the regents have to follow Dunleavy’s orders, which is appropriate because the Alaska Constitution says the regents are not subservient to the governor."  He suggested that Dunleavy reduced the cut because of a growing recall campaign. 

 Cole concludes,

As soon as the state budget is signed, the university will be free from the Dunleavy blackmail plan and the regents should begin the task of seeking the funding level UA needs from the Legislature, ignoring the antics of a governor on the run from a recall. 

The Dunleavy blackmail attempt, if he decides to continue with it, will do nothing but boost the recall campaign.

I hope that is true. Other directly related posts are dated August 13th and September 18 

(reporting on internal University feuding that may break up the UA system in spite of the reduced budget cuts).

And you'll be shocked to learn that Donna Arduin has left the building.