I realize there are many other factors, but the geography of the state inequality boom does not put the University of California system on the side of broad income growth.  Take a look at the figure at left, from a new report by the California Budget and Policy Center.

Of the top 12 regions that have seen the highest percentage of growth go to the top 1%, 7 have UC campuses.  Of the others, one has Stanford and SJSU, another has a Cal Poly, and two are something akin to agricultural plantations.

3 UC campuses serve more egalitarian regions (Davis, Merced, and Riverside).  They are also lower-income--and not associated with California's famous tech economy.  (I mean tech broadly to include related (and well-paying) financial and other services, and retain the murkiness of the term, whose aggregate employment generally remains less than 10 percent of any regional total.)

Research universities do not only serve their local regions, but there is national pressure for them to shift the balance back in this direction, and UC's D-M-R campuses can plausibly invoke regional service in their pitch for funds. Partial proof was the Riverside campus's successful bid to start a medical school that the state promised not to fund properly, but that carried the day on the basis of its location in a medically-underserved region that could also use new jobs.

What can we make of the kind of stretched correlation I've just produced? We can focus on the politics of the links rather than on the economic causalities.  The latter are very hard to identify. But politics generally works with exactly this kind of loose association.

Two generations ago, UC's association with the "knowledge industry" was an association with rising incomes distributed widely in the population. This reflected the rise in general individual productivity, which could in turn be traced to all levels of educational advancement, particularly bachelor's degree attainment.  UC could say it was building a broad middle-class. Politicians of both major parties had little reason not to fund that.

Today, UC's association with the tech economy is an association with the inequality boom.  While the productivity of middle-income people does not rise more slowly than those at the top, their wages do.   (Explanations for income growth at the top are generally about market pricing power of specific skills, not about their superior productivity growth.)   Going to a UC does not now insure that your wages will rise with your increased productivity.

Of course it never did insure this, and universities cannot fix the plutocratic tendencies of the tech economy, by which I mean that cluster of practices that insure that the "regional advantage" we touted in the 1990s will never produce a tech manufacuturing empire staffed by white-collar armies on the model, of, say, the South Bay aerospace empire of the 1950s and 1960s.  The point is that UC can no longer make the same political claims to resources on the basis of an ever-more democratic distribution of knowledge and income. Compared to CSU and the CCs, it is comparatively rich and also located in fairly rich places that look the least in need of public funding help.

The solution is not only to stress the large numbers of low-income students enrolled at UC. (UC policymakers should stop weakening this important case by exaggerating the immunity of low income students to burdensome student debt).  The solution will involve explaining the concrete contribution UC instruction and research make outside of the tech industry as well, and for the vast majority of California counties that have no UC-sourced start-up companies and limited tech employment.   All UC disciplines make major contributions to the present and future workforce.  Until UC can make the broader case for all the fields and all the skills it offers, budget politics will continue to run against it.

The following is a letter sent to Colleagues by the UCSB Faculty Association calling for opposition to the proposed new pension tier.

Dear Colleagues:
We are gratified by the strong response at the Town Hall of the faculty, resisting the unsound pension that UC is proposing to offer new hires starting July 1. Over 1,000 faculty have signed the petition opposing the new tier proposals. We are resending this message to give you an opportunity to join your colleagues by signing the petition if you have not done so. The deadline for making known your opinions regarding these changes is February 16.
Allow us to share with you our reasons for objecting to the current proposal:
1) We share the task force chair's bleak account of the "negative effects of the PEPRA cap on retention and timely retirement" (A guide to reviewing the recommendations of the Retirement Options Task Force, p. 7). In other words, the future of the institution is at stake.
2) We take issue with the fact that while the acceptance of the PEPRA cap is presented as UC's side of the deal with the governor and the legislature, the latter's part of the deal has not been fulfilled:
a) UCRP has NOT been acknowledged as a permanent state obligation;
b) the State's promise "of $436 M for the UCRP over the next three years" to help finance the Unfunded Accrued Actuarial Liability (p.4 of the Task Force report) is a misrepresentation. As Michael Meranze has underlined, the Legislature actually has "not engaged in any multi-year promise". In addition, of the $10.7B or 12B UAAL (numbers depending on market-value or actuarial-value), the hypothetical sum of $436 is only a very small percentage, not accomplishing much. In sum, we object to completing our side of a (bad) deal, when there is no actual commitment on the other side.
3) We take issue with the top-down way this complex issue has been handled. The Task Force had to begin from a declared reality that no one in the UC system other than President Napolitano had a hand in ratifying. This is not shared governance. In addition, the fact that the recommendations of the Task Force, whatever their merit, can be taken or left by President Napolitano further erodes whatever good faith and intellectual effort went into these proposals.
4) We are not convinced by the Task Force's arguments that introducing a Defined Contribution option is fiscally advantageous. No credible empirical evidence exists in the report or in recent economic history to support the assertion. Moreover, the proposed options, in their concern for portability, favor short-term employees over long-term employees, further undermining faculty loyalty to the institution or a commitment to public service.
5) We object to the ramifications of adding a new tier to retirement benefits that creates financial divides between those hired before 2016 and those hired thereafter. Even more, we see these changes as part of a broader national trend to eviscerate tenure and full-time employment. Having to acknowledge such systematic differentials to new hires reduces not only our ability to recruit young faculty but also our pride in doing so as well as our willingness to encourage our students to become university professors.
For more information on this issue, please visit our website at ucsbfa.org.

We urge you to sign the petition to express your opposition to proposed changes to the UC Retirement Plan.
UCOP has also set up a comment link where you can provide your feedback on the task force recommendations. We urge you to express your concerns about the plan there. If you do, please also send a copy of your comments to us at newtier@cucfa.org.
Thank you for your attention to this important matter.
The Board of the Santa Barbara Faculty Association
Julie Carlson
Jorge Castillo
Nelson Lichtenstein
Constance Penley
Erika Rappaport
Elisabeth Weber
Robert Williams

The Task Force charged with making a silk purse from the sow's war of President Napolitano's pension agreement with Governor Brown issued its report on Friday.  To no one's surprise, the Task Force indicated that the task was impossible; given the limits the Task Force faced most faculty and many staff (especially in the health sciences) hired from July 1, 2016 will face dramatically reduced retirement benefits compared to current employees.  This situation results from two interrelated factors: the actual budget deal that President Napolitano accepted and the desire on the part of Vice-President Brostrom that there be savings produced by the new 2016 tier.  In exchange for a relatively small (about 5% of UCRP's unfunded liability) short-term State contribution to UCRP, UCOP has agreed to reduce the compensation for generations of employees to come.

In this post I am going to do several things:  first, describe the contexts within which the Task Force was presented with its impossible task; second, provide a broad indication of the Task Force Majority's recommendations; and third, describe the process to come with some suggestions and comments on the situation facing faculty and unrepresented staff (as is often the case represented staff may have more control over their situation since they are entitled to collectively bargain on these matters).

THE CONTEXT

You will recall that following UCOP's Fall 2014 proposal for a 5% tuition increase, UC and the Governor's office established the so-called "Committee of Two" to examine the cost structure at the University and secretly negotiated a budget agreement.  (For the Senate's Committee on Planning and Budget's critique of this process see here).  Despite the hullabaloo that accompanied those high level discussions it was clear from the start that the Governor was only interested in cost controls and that the likelihood that the University would gain in substantial ways was quite low.  In the end those expectations were met.  Although UC received a promise from Governor Brown that he would extend his planned base budget increases for an additional 2 years he succeeded both in locking UC in an ongoing under-funding and also in increasing the demands on the University.  In addition, the threat of tuition increases alienated the Legislature and, at least indirectly, led to UC having to agree to expand resident undergraduate enrollment without sufficient funding to pay for the increased costs.  We have commented on the weaknesses of that deal before (here, and here).  But as part of that deal President Napolitano accepted a permanent reduction in pension benefits for future employees in exchange for the Governor's promise of a temporary State contribution to UCRP.s unfunded liability of $436M over three years.

Under the terms of President Napolitano's agreement with the Governor, UC is committed to reducing the cap on the amount of income that can count in calculating an employee's pension benefits in UCRP.  UCRP as you know is a Defined Benefit Plan.  As a result an employee is promised an annual payment after retirement based on a calculation that takes into account an employee's three highest salary years, years of service, and age at retirement.  For employees hired before July 1, 2016,  earnings up to the Federal Cap (now about $265,000) could be counted.  For those hired on July 1, 2016 or later the University is proposing to shift to the PEPRA State Cap (now at $117,020 and tied to inflation). It is important to recognize that these numbers are limits NOT on retirement benefits (which are lower) but on the amount of earnings which can be used to calculate retirement benefits.  Starting with those hired on July 1, 2016 earnings above the PEPRA cap will simply not be included in the calculation.  The Task Force estimates that these new rules will affect roughly 25% of employees hired on or after July 1, 2016 (13-14).  These individuals tend to be concentrated in the Ladder Faculty, the Health Sciences, and Management (13) Because of the large number of represented nurses. about 40% of these individuals will have the ability to engage in bargaining over these terms.

The Task Force was charged with figuring out how to change the retirement system.

THE PROPOSAL

The basic parameters of the proposal can be sketched quickly (and you can find them at pages 5-7 of the Report).

The Task Force is proposing that new employees be given two options:

1) The first (Plan A) is hybrid plan.  In it an employee would participate in the Defined Benefit Plan offered by UCRP (with benefits calculated on income up to the PEPRA cap) with a Supplemental Defined Contribution Plan (with University contributions) on income between the PEPRA cap and the Federal Cap.  Employees who choose Plan A would continue to vest after 5 years (as is the case now) and would continue to contribute the same amount annually to their pension as do employees hired before July 1, 2016. Once in Plan A you would be committed to Plan A.  Plan A is proposed as the default choice.  It is important to note that the Defined Benefit portion of this proposal would operate under the conditions imposed on the 2013 Tier--who already had a later retirement age than earlier hires.

2) The Second (Plan B) is a Defined Contribution Plan with both the employee and the University contributing up to the Federal Cap.  Again, the amount that the employee would contribute would be the same as Plan A.  Employees who chose Plan B at hiring would be allowed to switch to Plan A after 5 years of employment (this would be a one-time opportunity).

A Defined Contribution Plan, as you know, promises a certain amount of annual contributions to a pension fund but no obligations as to payouts after retirement. The risk in the latter type of plan is borne by the individual (just as s/he accrues greater portability and the benefit of any investment brilliance).  A DC plan can be better for shorter term employees.  But the employee bears the risk of either poor investment performance or longevity risk.  It is not exactly clear why the Task Force chose to include a DC plan (it was not required by the Budget Act).

The actual details of the proposal are considerably more complex and depend on a variety of options concerning the actual amount of contributions (by the University) to the different plans, the expected annual growth of the value of the DC plans, the costs to the University of choosing between different contribution levels, the age of hires and the distribution of choices between plans, etc.  These questions mean that the actual effects of these two plans are still in flux as both the Task Force Report and Senate Leaders Dan Hare and Jim Chalfant make clear.  So university employees are being asked to respond to a concept without precise numbers on which to make that decision.

But despite the complexities it is clear that the retirement benefits for affected future employees will be dramatically reduced. (for a quick way to see this effect see 84)

MOVING FORWARD

The Academic Senate (and I assume staff associations) have until February 15th to formulate responses to the Task Force Report.  The Senate, in turn is asking for comments and responses by February 5th.  I want to underline these dates because they show quite clearly the closed-off nature of the process.  Despite the claims by both UCOP and the Task Force about consultation, faculty and staff at large have less than a month to respond to a proposal that will significantly change the compensation for future employees with an unknown effect on the University as whole.  Given this situation I would argue that the Senate and other faculty and staff organizations proceed on two tracks.

The first, involves a series of technical considerations but is politically the easiest to do.  This option would be to insist that wherever the Task Force provides alternatives in the amount of the University's contributions to retirement income that President Napolitano and the Regents choose the most generous alternative.  In addition, the proposed opportunity to switch from Plan B to Plan A should not be set at 5 years but later to allow for faculty to make the decision after their cases for tenure have been resolved.  The guide provided by Chair Hare and Vice-Chair Chalfant is the best place to start for evaluating these different questions.  But this avenue is the conventional one.

The second and more significant option is to reject the proposal.  I think that the Task Force did the best that they could under the circumstances.  And I recognize that trade-offs often need to be made. But the funding gained under this agreement is not worth the damages done to compensation nor the potential damage done to the University as whole.  The Senate should oppose this deal even if it means returning the initial payment of $96M.  There are a variety of reasons for this:

1) As I indicated above there is no question that acceptance of this deal will reduce retirement benefits for a significant portion of future employees.  Nor is there any reason to think that the University has any real program to make these losses up in other ways.  Indeed, as the Report indicates, the University does not have an accurate idea of total compensation and competitiveness (the last report having been done in 2009).  (64-65)

2) What does the University get in return in financial terms?  Not much.  As I indicated above, the three year state contribution addresses only a very small amount of the unfunded liability. And according to the calculations of the Task Force, establishment of the New Tier under present conditions will speed up the elimination of the unfunded liability minimally if at all.  In fact, under certain scenarios the elimination of the unfunded liability might be faster under the 2013 Tier (with borrowing) than under most of the 2016 options.  (57)  Nor does there seem to be much savings in yearly terms.  And these savings are placed far down the road as individuals hired under the 2016 come to replace the 2013 Tier in retirement.

3) The pension deal and the Task Force proposal mark a crossroads for President Napolitano and also for shared governance within the University.  It is conceivable that the President did not realize the extent to which the pension deal would reduce benefits.  But faced with the Task Force report it is clear that the reduction would be significant and that the financial benefits are limited.  If there is significant opposition to this proposal President Napolitano would have the option of concluding that the deal was a mistake.  If there is significant opposition President Napolitano would also have the option of demonstrating an openness to shared governance on policy rather than just on implementation of policy already decided by senior managers.  It is possible, of course, that UCOP has calculated that given overall market conditions they are willing to weaken recruitment and retention of top faculty and staff (that certainly is the implication of the Governor's position).  But at least we would be clearer on that.

CONCLUDING COMMENTS

1) If the University wants to consider revamping the retirement system it should, at the least, demand that the State acknowledge its own obligation to funding of UCRP and restart contributions on an ongoing basis.  Much is made of UC's "pension holiday" and it clearly went on too long.  But it is important to remember that there has been a State "pension holiday" from funding UCRP as well (as it funds other public employee retirement systems).  Renewed ongoing funding would enable UC to eliminate the loss in retirement income or total compensation on the one hand and to reinvest in core functions on the other.

I recognize that this is a politically challenging route.  Taking this route would not be without its dangers in terms of relationships with the governor and the legislature or in terms of motivating those who are opposed to all pensions (especially public ones) But the Governor is at best disingenuous on this issue.  If you look at his 2016 budget proposal, he includes UCRP as part of the debts and obligations under Prop 2 when he wants to indicate how much debt the State has.  (3)   But as a matter of policy he refuses to acknowledge that UCRP is a permanent state obligation.  Moreover, even the short-term funding is only a gubernatorial promise at this point.   The Task Force, to be honest, was less than forthright in this regard when they open their report with the statement that "As part of the 2015/2016 Budget agreement between the University, the Governor, and the Legislature, the State will provide a total of $436 million for the University of California Retirement Plan (UCRP) over the next three years." (4)  The Legislature has not engaged in any multi-year promise.

2) If nothing else, the Report of the Task Force is another indication that UCOP's tuition gambit and subsequent "Committee of Two" process was unsuccessful.  Although I commend President Napolitano for actually advocating for increased State funding (something her predecessor was particularly poor at doing) the Tuition strategy seems to have backfired.  The Legislature was alienated, the budget deal that resulted showed little if any improvement from what the Governor had indicated previously, UC has now agreed to take large numbers of additional students without adequate funding, and the pension deal was a mistake.  Moreover the secrecy of the process not only sidelined effective shared governance but, as with the proposal on the governance of the health sciences, precluded an effective mobilization of debate and ideas about the best ways for the University to move forward.  As with so much of the debate over higher education today, efficiency and speed is held in higher regard than thoughtfully considering the long-term implications of policy and practice or aiming to improve the quality in higher education (as opposed to simply lowering spending). Rushing to produce a bad idea just means you produce a bad idea more quickly.

For your convenience:

The Task Force Report can be found HERE.

The Guide to the Report produced by Chair Hare and Vice-Chair Chalfant can be found HERE.

This week's Regents meeting's Agenda is chock full of important items.  In particular, UCOP is presenting the 2016-2017 budget proposal along with a three-year "sustainability" plan, a proposal to improve the finances of UCRP through internal borrowing, and a proposal to centralize the management of the Health Care system. Unfortunately, the lessons from this week's Regents' agenda is that despite UCOP's efforts to tout its agreement with Governor Brown, last year's tuition gambit has done little to change the fundamentally underfunded situation of the University.  Nor is there any indication that either the Regents or UCOP are prepared to break from long-standing patterns of strategy in order to begin to ensure a UC focused on its educational mission and on increasing the quality of its offerings.

THE PLAN ITSELF

UCOP's proposed budget is a work up of the deal that President Napolitano and Governor Brown negotiated by sidelining both the Legislature and the Academic Senate.   Chris and I have already commented on the deal itself so let me simply point to some of the more important elements.  The proposed Budget for 2016-2017 assumes another 4% increase in base funding, $96 million in one-time funding in exchange for changes in UC's retirement system, $25 million for enrolling an additional 5000 California residents, $25 million for deferred maintenance, and an additional $68.7 million in new Non-Resident Tuition (NRT) revenue.  It continues to make the annual promises about the fantastic savings that UCOP is gaining through various technological and management initiatives. In all, UCOP reports a total 2015-16 revenue of $28.3 billion of which core funds constitute $7.3 billion.  In 2016-2017 they are budgeting for an increased core revenue of $481.3 million.

Along with the proposed budget UCOP is submitting what it calls a three year "Financial Stability Plan."  The plan restates the Brown-Napolitano deal that calls for continued 4% annual base budget increases through 2018-2019 and fulfillment of the Governor's promise of $436 million over 3 years (although the Legislature has only promised the first $96 million) in exchange for reducing retirement benefits substantially for future employees.  It includes the proposed $25 million that the Legislature has offered for an additional 5,000 California resident students in 2016-17, and offers to enroll an additional 2500 more in 2017-2018 and 2018-2019 (hopefully in exchange for additional funding). It increases the NRT by 8%, the student services fee 5% annually, and proposes tuition increases tied to inflation beginning in 2017-2018.

A first point, which Chris has made many times, is that the 4% increases, while better than the extreme cuts of the late Schwarzenegger and early Brown administrations, are too small to overcome the longer-term under-funding of the University that goes back 15 years.  To make matters worse, both the Budget and the Financial Stability Plan each bake in increasing burdens on campuses and their students, faculty, and staff.  The $25 million promised for the upcoming year's 5000 additional resident students is approximately half of what both UC and the LAO agree is the marginal cost of an additional student (8). The new underfunded students will force campuses to shift funds from other efforts to pay for these costs (costs that will draw on core funds).

In order to help pay for these students, UC campuses will continue to increase the number of non-resident students, although they say at a slower pace (due to political pressures), so that there will be an additional 1200 non-resident students next year and the latter will be paying an 8% tuition increase.  UCOP apparently believes that the State will continue to pay $25 million each year to help support the initial 5000.  This seems a reasonable assumption in the short term, though it is a long-term problem if it is not included in an expanded base allocation.   If the additional 5000 are also inadequately funded, UC will have added 10,000 resident students over 3 years without providing campuses with the resources needed to properly educate and support these students.

UCOP insists that they are determined to lower the faculty-student ratio throughout the system.  But does anyone really foresee an increase in faculty numbers that could do that even as student numbers jump--6200 new students in 2016-2017 plus at least an additional 2500 additional residents in each of the following two years?  For those campuses with significant NRT, at least some of those funds will need to go to supporting the new enrollments.  For the other half of the UC system without significant NRT,  those enrollments likely will eat up a chunk of the monies they will receive from rebenching and the additional 4% in base state funding.  This plan may be sustainable in the sense that the campuses and students will still be here at its conclusion.  But it doesn't suggest that UCOP's stated commitments to increasing quality and improving campus facilities can be met.

The Budget and Sustainability plan together lock in continued under-funding, increased burdens on campuses, faculty, and students, and further erosion of shared governance at UC.  At its best it is predicated on a set of promises from Governor Brown.  I needn't remind people how well previous compacts with Governor's have held up over time.

THE FUTURE FOR THE FACULTY

A second aspect of the Budget, one of special importance to both faculty and staff, is the proposed reorganization of the retirement system.  In her negotiations with the Governor, President Napolitano agreed to create a new tier for those hired on or after July 1, 2016.  These employees would have a pensionable salary limit (i.e. the amount of annual salary that can be considered in calculating the size of a person's pension) based on the state's PEPRA limits rather than the previous, and much higher social security cap.  In return, the Legislature agreed to release $96 million once these changes have been made, and the Governor has promised additional funds up to the $436 million I mentioned above.  The Legislature has made no commitment to the last two years of the Governor's promise. (For good accounting of these developments there are various posts on this site and by Dan Mitchell on the UCLA Faculty Association Blog).

I have no doubt that there was, and is, political pressure on this from Sacramento.  But to get some sense of the extent of UCOP's concessions on this score it might be helpful to turn to another item on the Regents Agenda--a proposal to borrow money over the next three years from the University's Short Term Investment Pool (STIP) to help pay down the legally defined unfunded liability of UCRP. (As Bob Samuels pointed out long ago, this legal liability is based on the requirement that UCRP has enough money on hand to pay out pensions if everyone retired immediately).  This short term funding is something that the Senate has been pushing for several years, though campuses, perhaps especially those with medical centers, have been resistant.

In very basic terms, the proposal will allow the University to borrow from its own funds to help pay into UCRP, thereby helping to keep the University's annual contribution to UCRP at a steady state and to shorten the time until the unfunded liability has been paid.  Strikingly, UCOP is proposing to borrow $1,463,400,000--or put another way nearly three times the amount of money that the Governor is promising in exchange for a dramatic reduction in the worth of UC benefits.  As UCOP continues to emphasize, perhaps in the hopes of muting opposition, this new plan will not affect anyone employed before July 1, 2016.  But it will affect new generations of UC employees and lead to a significant reduction in overall compensation.  Although theoretically some of this loss could be made up in salary and other forms of compensation,  those forms of compensation do not have the same tax benefits as do pensions. More importantly, they increase retirement risk.  Nor is it clear why anyone should think that state funding for salaries will increase in the future at a rate that will cover the lost compensation value for future employees.

There is presently a Task Force charged with determining what the new pension tier will look like and with coming up with strategies to minimize the reduction in benefits to future employees (since it is unlikely that they can be eliminated).  The Task Force is expected to present its conclusions to President Napolitano next month and there will be a limited period for comment early next year.  But as Dan Mitchell has repeatedly pointed out (e.g., here, here, and here), the proposal for STIP funding includes a statement that "New employees will have the opportunity to choose a fully defined contribution plan as a retirement option, as an alternative to the PEPRA-capped defined benefit plan." (3)  This statement is included despite the fact that even the University's own FAQ on the question insist that no decision has been made as to whether to have a purely defined Defined Contribution Plan (h/t Michael Buroway).

So we have a cut in retirement benefits negotiated outside of the regular shared governance plan, a special Task Force, set up by the President to determine the shape of those cuts, official information on the Task Force site saying that no decision has been made about a defined contribution plan, and an item on the Regents Agenda suggesting that that decision has been made even though the Task Force has not finished its discussions.  This situation exists despite the fact that several years ago, after extensive study, the University recognized that a Defined Contribution Plan was less able to serve either the needs of individuals or the needs of the institution as a whole.  Nor does the amended language of the Budget Bill (section 85) require the University to start a Defined Contribution Plan. This decision by UCOP to overturn the carefully established retirement consensus builds upon other indications that UCOP is perfectly happy to sideline shared governance when it is convenient for them.

THE RETURN OF THE REPRESSED

There is one other item, or rather the absence of one other item, in the Budget proposal that is significant.  In its Budget Summary (pg. 29) UCOP notes a series of accountability measures required by the State. Interestingly, I could find no mention in the documents (please let me know if I missed it) of another set of legal obligations that are important for the budget.  Those are from section 84 that requires the University to provide much more detailed transparency about its administrative structure--especially concerning the Managers and Senior Professionals Group (MSP) and to rethink its proclaimed market comparisons for the Senior Management Group.  I mention this not because I want to demonize the people in either group but because it is difficult to see how a truly sustainable future can be created for the University that does not seriously rethink its administrative structure, starting with a better understanding of the relation between administration and the educational core.

If UC truly wishes to create a sustainable future for itself, it will need to create a more decentralized administrative structure, one more attuned to the actual teaching, learning, and research that goes on in the everyday life of the institution.   That sort of transformation might have resulted from the UCOF process a few years ago--but it didn't.  It is clear that it will not emerge from UCOP.  But it is needed more than ever.

As Dan Mitchell has been reminding us, UCOP has appointed a Task Force to implement the Regents agreement to reduce pension benefits for future employees.  As a result of the Committee of Two, UCOP has agreed to lower the amount of employee salary that can be counted towards UCRP to approximately $117,000.  They are proposing that some form of hybrid defined benefit/defined contribution plan be created to allow employees to save above that $117,000 limit.  UCOP is also proposing that an all-defined contribution (DC) plan be developed that would allow future employees to opt out from the defined benefit plan entirely.

UCOP insists that the "New retirement benefits options are being developed as a result of the budget agreement between UC and state leaders, which included nearly $500 million to help pay down UC’s unfunded pension liability." But there are several issues that need to be raised about this claim.

1.  UCOP refers to the nearly $500M that the University will receive from the state in exchange for pension modification.  But the University will have received only $96M upon the creation of the new pension tiers. I understand that the actual state budget promises only this one year of funding. Although President Napolitano and Governor Brown may have agreed on the larger number, there is no sign that the Legislature or its leadership have agreed.  What future budgets will look like is always unclear. UCOP, in effect, is proposing a serious reduction in pensions for future employees in exchange for less than a third of the money they now estimate they will have to spend to complete UCPATH.  Will their predictions for future state pension contributions be more accurate than their predictions on UCPATH?

2.  There is no evidence that either the Governor or the Legislature asked that UC create an option for a stand-alone DC plan. Sacramento's concern had to do with the limits on the salary on which benefits could be accrued, which is consistent with its hostility to high levels of UC executive compensation.   The notion that there needs to be a stand-alone DC plan appears to have emerged from UCOP or from some other source within UC.  President Napolitano's justification for this proposal seems to be that it is what has happened in the private sector so it should happen at UC.  But we should recognize that the shift in the private sector occurred not because of widely accepted actuarial proof that DC plans are better for employees but because they enabled businesses to shift the cost of retirement onto retirees. There was nothing natural or inevitable about it. It was not driven by a desire to stabilize or improve retirement security for employees.   

In addition, you'll recall that the University engaged in a serious debate about this question only a few years ago and decided to retain its long-term commitment to a DB plan.  Rather than appointing a task force to determine the best way to implement this new plan UCOP should engage in an open discussion about whether or not this is actually better for employees. There has not been, to my knowledge, any reason to think that the relative benefits of DB vs DC plans has changed in the last few years.  If anything, the weight of the argument suggests that DC plans are worse for employees and may in fact be worse for employers.  DC plans raise the fees on accounts, force employees to assume greater risk, and tie individual retirement fate even more closely to the stock market.  From the vantage point of employers, DC plans increase fees and reduce incentives for employees to stay. There is also--despite assurances to the contrary from UCOP--the danger of ultimately undermining the the DB plan by leaving it an "orphan" plan--moving funds needed to sustain it over the long term into other more volatile directions.

3.  Nearly two years ago, Colleen Lye and James Vernon documented the decline in the quality of UC faculty salaries and benefits.   The 2014 Mercer Remuneration Study confirmed these findings (see slides 33-34 for a summary).  UCOP's acceptance of the state's pension limits and even more so its eagerness to move away from a commitment to a DB plan simply accelerate this decline.  Although I think that there are reasons to cap accrual salary in exchange for sufficient state-funding on an ongoing basis, this is not the deal that UCOP has achieved. And the policy drift towards the Defined Contribution plan is an entirely different matter.  UCOP seems to be removing the conditions that promote loyalty to the institution and seeking to encourage faculty to consider UC a way-station rather than a home.  It is the self-destructiveness of existing conventional wisdom at its most short-sighted.

The faculty, and the Senate as part of the faculty, needs to insist that the Task Force be empowered to decide--after wide-ranging discussion and employee consent--whether a DC plan is good for the university and employees.  It should not be limited to deciding how to implement such a plan. 

In other words, the Task Force needs to maximize the interests of future employees and not simply implement the practices of the private sector.

UPDATE:  Dan Mitchell has now written a new post that very helpfully lays out the problems with "orphan" pension plans.

By Joe Kiskis  (UC Davis)

This note makes a few comments on the final UC budget for 2015-2016 and then focuses on points related to the UC Pension Plan (UCRP). To some extent, it updates previous comments here by including changes since then and information that was not available then.

The 2015-16 UC Budget and UCRP

To get good information on the budget, one must read both AB 93 and SB 97. The process this year was a little convoluted. On June 15, the legislature passed AB 93, the Budget Act of 2015. This was the Legislature's version of the budget and was passed on that day so as to meet the constitutional deadline. It was done before the Legislature and Governor had come to agreement. Their agreement was announced the next day. To account for that and other small items in the following days, SB 97 was passed on June 19. It makes many significant amendments to AB 93, including a number relevant to UC. Both AB 93 and SB 97 were signed by the Governor. However the Governor exercised his line item veto authority in a few minor ways that are not relevant to UC. To get complete information, there are, as usual, trailer bills to read. One of those, SB 81, has a few parts relevant to UC---most significantly concerning the Middle Class Scholarship Program.

The main features of the UC budget concerning tuition and the base budget came out as expected and as have been widely reported. However, it's worth noting that the final language on these points is less proscriptive than in the original version and that what is expected to happen in the out years is just that---an expectation that is not mandated in this budget. Briefly, per the Regents decision of May 2015, tuition for California resident students is to remain constant for two more years. Following that, modest increases comparable to the rate of inflation are possible. On the other hand, for non-resident students, tuition will likely increase by 8% in each of the next two years. System-wide Student Services fees (as opposed to tuition) are allowed to go up 5% ($48).  The increase in the 2015-16 UC base budget is the same as the Governor originally proposed, i.e. 4% or $119.5M. The expectation is that 4% increases will continue through 2018-2019.

There was an expectation that the Legislature would augment the Governor's budget with funding for enrollment growth and that the Governor would not line-item veto it. This did not turn out as well as was hoped. The amount is only $25M, and it is contingent on UC adding 5,000 resident undergrads by 2016-17. This is a short timeline, and the amount is far below that needed to educate 5,000 students for one year. On a per student basis, it is also substantially below the average State contribution to the cost of education.

Earlier versions of the budget had limits on nonresident enrollment. Those did not make it into the final budget.

In the trailer bill, the eligibility requirements for the Middle Class Scholarships have been raised and the funding for the program has been decreased.

UC Retirement Plan (UCRP)

As it turned out, there is a large discrepancy between the language related to UCRP in the publicized agreement from the Committee of Two (or equivalently in the Governor's May Revise statement) and that which actually appeared in the final budget product.

The original claim was that there would be a one-time payment of $436M spread over three years ($96M in the first year) to pay off a small fraction of the UCRP unfunded liability. In return the University agreed to make a permanent change to UCRP by adding another tier that would apply to new employees. In this new tier, UCRP eligible salaries were to be capped at the inflation indexed PEPRA/Social Security limit ($117k for the current year) rather than at the IRS limit of $265k currently used by UCRP. Employees in the new tier would have the option of either a defined benefit plan with the new cap in combination with a supplemental defined contribution part or a defined contribution plan with no defined benefit portion. The second option of a straight defined contribution (DC) plan is most troublesome. Fortunately, no language describing such options was incorporated into the budget bills signed by the Governor.

The Governor's May Revise letter to the Legislature suggested budget bill language. This suggested language said only that UC would get a one year addition of $96M in exchange for making UCRP consistent with the PEPRA cap. It said nothing about how that should be done. It made no mention of $436M, no mention of a DC supplement, and certainly no mention of a DC only option. This recommendation was followed, and the language that the Governor suggested is essentially that of the budget bills. However, to drive home the point that there is no larger deal, the amended version of the budget adds:

"This appropriation does not constitute an obligation on behalf of the state to appropriate any additional funds in subsequent years for any costs of the University of California Retirement Plan." (SB 97, p. 96)

Thus neither the Governor nor the Legislature are pressuring the University to introduce a straight DC option. The DC option is something introduced (most likely by UCOP) during discussions in the Committee of Two but done without appropriate consultation within the University. Nevertheless, the Office of the President intends to pursue the possibility of a DC only option. In the discussions that will take place in the coming months, it is worth keeping in mind that a DC option appears to be primarily a priority of UCOP and not of the Legislature or the Governor. Note also that the relative merits of defined contribution verses defined benefit plans were thoroughly, carefully, and widely discussed in the University about six years ago. The conclusion was that the excellence of the University was best served by continuing with UCRP as a defined benefit plan. Thus in 2010, when the President recommended and the Regents endorsed pension reforms, UCRP was preserved as a defined benefit plan.

As you have probably seen, the Governor and the Legislative Leadership have agreed on a final budget bill.  From a funding standpoint, there is little in the new bill regarding UC to change Chris's critical analysis of the Governor's May Revision.  UC is scheduled to receive up to $25M beyond the Governor's original call for a 4 percent general fund increase on condition of a continued tuition freeze.  CSU fared somewhat better.  It will receive approximately $50M over the Governor's May proposal.  It too, though, has a variety of conditions placed on the money.  For UC the key pages of the bill are 105-113 and for CSU 113-117.  I'm going to focus on UC in this post because I am less familiar with the implications for CSU. But I hope that people at CSU will use the comments section to expand the discussion.

There are several key points to make about the total budget package.

First, it includes a one-time payment of $96 million for the UC pension.  But this money is dependent on a dramatic reduction in the benefits of UC's defined benefit pension plan (as was clear from the Regents agreement with the Governor).  After a new system is put into place, the maximum salary that can be counted in a pension calculation for new hires will be approximately $117,000.  The Regents have proposed a supplemental Defined Contribution Plan and have also floated the possibility of allowing new hires to go entirely into a DCP.  If the latter should happen it is possible that the DBP will become unsustainable in any form.

Second, the Legislature was able to get the Governor to agree to an additional $25M above his May proposals.  But this money is contingent on the University enrolling an additional 5000 resident students by the 2016-2017 academic year (107).  There are a couple of things to be said about this situation.  First, as Dan Mitchell pointed out, UC is unlikely to increase numbers in a dramatic fashion for the upcoming year.  That means that these increased numbers will hit with great impact in 2016-2017.  Having been at UCLA when it attempted a dramatic increase in numbers I can say that without proper preparation and expanded faculty and student services the effects are quite serious. Secondly, the Legislature is assuming $5000 of the marginal cost of each new resident student.  This figure is even lower than the LAO calculation that, as I pointed out in an earlier post, would lead to the permanent under-funding of the University. In addition, the money will arrive long after the students have both enrolled and had their presence documented by UCOP.

Sacramento is also insisting that this money, itself inadequate for the simple increase without a lot of supplement, also be used to increase and quicken graduation rates.  Now increasing graduation rates is something that we can all support--but Sacramento appears to be concerned with increasing graduation rates no matter the effect on education.  It wants more students to pass through more quickly with inadequate support--a position that ties in nicely with the Governor's vision that costs can be driven down by pushing students into online courses or reducing requirements.  There is, in all of this, a general disregard for academic expertise and an apparent conviction that quantity is the most important variable.

Although less explicit, it seems as if the Legislature and the Governor are willing to make the University more dependent on non-resident students even as they insist on increasing the number of resident students.  Although the Legislature and the Governor have insisted on a continuation of the tuition freeze for resident students through the 2016-2017 academic years (106), President Napolitano has been empowered to increase tuition for non-resident students up to 8% annually.  Both the Governor and the Legislature have apparently agreed to the assumption that non-resident students can be used to underwrite resident students so that the State can continue its long-standing failure to support higher education in the state.

Thirdly, and more positively, the Budget Bill demands greater administrative and spending transparency (108-109).  The bill directs the University to finally clarify the nature and distribution of the Manager and Senior Professional category (long one of the black holes of administrative transparency), to clarify the financial sources it considers applicable to educational activities, and to provide forecasts of costs and resources through 2018-2019. Although this transparency will not accomplish anything in and of itself, it will allow for a more open discussion of priorities than has been possible in the past.  The bill also demands that the University include state employee salaries in any market calculation for the Senior Management Group.  In effect, Sacramento is challenging the University's insistence that its administrators should be paid more than other public executives. Given the University's recent practice of hiring administrators without prior background as educators it is perhaps not surprising that the Governor and Legislature are now wondering why they should be treated differently than other public administrators.

                                                                               *****

At this point in time, it is difficult to see how President Napolitano and the Regents efforts to provoke public support for the University were successful.  Nor is it clear that the continued willingness of the University to act as if the Governor is the only player in town makes any sense.  In the end, the University received approximately 25-30M extra dollars compared to what the Governor had promised in previous budgets.  But this additional money comes with some very crucial strings, including a drastic reduction of pension eligibility, agreements to look into reducing graduation requirements, increased auditing of faculty and staff, increased dependence on NRT, and the possibility of even greater state intrusion into university affairs. It is also true that President Napolitano was able to get the Governor to promise a longer-term funding commitment to the University.  But as we learned from Schwarzenegger's "compact," those promises are easy to make and easy to break.  So, the bottom line seems to be minimal increased funding, seriously increased auditing of academic life, continued pressure to sacrifice educational quality to cost cutting, and a commitment to substantial cutbacks in retirement benefits for future employees.  Not a good budget round.

by Joe Kiskis

COUNCIL OF UC FACULTY ASSOCIATIONS' STATEMENT ON UC BUDGET DEAL

As the Legislature and Governor enter the end game for the 2015-2016 budget, here is a review of provisions related to UC in the Governor’s latest budget proposal—the May revise, which is now being considered by the Legislature.

It appears likely that the final UC budget will have provisions that address access and affordability. What is missing are resources to ensure that the university can maintain quality. It is the hardest to quantify, the weakest politically, and is now the most seriously threatened.

This budget is another demonstration of the truism that the only way to restore access, affordability, and quality is through adequate State investment in public higher education. In spite of strong revenues to the State, the Governor’s budget falls well short of what is needed to reverse the negative trends in recent years. As it happens, it is well within the means of the citizens of the State to restore all of California public higher education to the levels of access, affordability, and quality enjoyed in 2000-2001.

The May revise budget summary starts the UC overview on page 28.

Many aspects of the May revise as they relate to UC are contained in the agreement of the “Committee of Two”  now endorsed by the Regents.

1) Systemwide tuition and fees for California resident students are to remain constant for two more years. Following that, modest increases comparable to the rate of inflation are allowed. On the other hand for non-resident students, tuition will increase by 8% in each of the next two years.

2) Increases in the UC base budget are to be the same as the Governor originally proposed, i.e. 4% per year ($119.5M for 2015-16) but are now continued through 2018-2019. This is much less than what the State should contribute to replace cuts since 2007 and is also substantially less than the needs identified in the UC proposed budget for 2015-2016. (Further detail is here).

The May revise also proposes one time funds of $25M for deferred maintenance and $25M for energy efficiency projects.

3) The May revise contains a tepid and ambiguous recognition of a State obligation to UC pensions. One-time funds of $436M spread over three years (with $96M for 2015-16) are proposed. However, this is Proposition 2 money, which can be used only to reduce the UCRP unfunded liability (about $7.6B in the last annual report). The one-time payment is only modestly significant in the long run and has negligible impact on the University’s operating budget in the near term. This is because the University has not planned to increase the UCRP contribution rate above 8% for most employees and 14% for the employer. Contributions at this rate cover only the current year additional liability and some of the interest on the unfunded liability. i.e. at this point, the regular employer and employee payments are making no contribution to retiring the unfunded liability. Thus in near term years, the Proposition 2 money does not reduce the large negative impact on the UC operating budget from regular UCRP contributions. The Proposition 2 money could be framed as a replacement for or enhancement to UC’s own occasional ad hoc payments to reduce the unfunded liability, but these have been very controversial, and UC has not revealed any plans to make another such payment.

Unfortunately this modest one time contribution comes with permanent strings. In return UC is required to introduce yet another tier to UCRP that would apply to new employees. The new tier will mirror state law for other state employees. In this tier, UCRP eligible salaries are to be capped at the inflation indexed PEPRA/Social Security limit ($117k for the current year) rather than with the IRS limit of $265k currently used by UC. Employees in the new tier will have the option of either a defined benefit plan with the new cap and an add-on defined contribution plan to supplement the defined benefits or a fully defined contribution plan. It is this second option that is particularly troubling.

The relative merits of defined contribution and defined benefit plans were thoroughly evaluated and debated during the extended review that led to the 2010 reforms of the UCRP. The conclusion was that a defined benefit plan is the more advantageous option for both the University as an employer and for its employees.

The main concern is not so much that UC has cut a deal on this issue but rather that it has made such a poor deal. For very modest one-time money, it has agreed to make permanent changes to UCRP including offering a completely defined contribution option that will put at risk the whole of the defined benefit plan. (Chris Newfield has previously made similar comments.) In addition the closed process by which this agreement between the Governor and the President was reached has undermined shared governance and collective bargaining.

4) UCOP has stated that the Governor has agreed not to veto additional appropriations for UC that come out of the legislative process. The University is asking legislators for additional funds to increase California resident enrollment.

5) There are several areas in which the President has committed UC to the implementation of additional efficiencies. These include transfers, time-to-degree, advising, and use of technology. Some of these Presidential promises relate to topics that are squarely within the authority of the Academic Senate, and all of them would normally be addressed through shared governance.

You can find more information on CUCFA's activities here

I'm sure 2014 in higher ed was different from 2013, but right off I can't think of how.  The nation continued its permanent public university austerity program, encouraged flimsy hopes for ed-tech rescues, conducted long political arguments over possible 2-percent revenue increases, fantasized about self-unbundling into flexi-modularity, and proclaimed indignant doubts about the educational value of going to college at all.  So what was new? Even my biggest stayed the same, which I called the "hardening of the downward definition of public higher education through budgetary means, with no public debate."  

Cheer up, I said to myself--it's the holidays! Santa Barbara's one day of winter rain has already come and gone. Some new things did happen in 2014 higher ed, and some of them were good.

1. The College Liberation Movement.  The splashy version came from some Ivy League humanist dissidents who described elite private universities as sorting machines for those reared to rule our newly post-middle class society.   There was the "excellent sheep" debate, started by William Deresiewicz's July article, "Don't Send Your Kid to the Ivy League" and carried on in his book, Excellent Sheep, sustained by attacks on him by Jim Sleeper among others, and brought in quieter form to the big screen by the film Ivory Tower.   

Dr. Deresiewicz drew a sharp line between what happens at places like Yale, described as training in "the analytic and rhetorical skills that are necessary for success in business and the professions," and actually learning how to think.  However one felt about the details, the discussion put the humanistic goal of personal development at the center of the college agenda.  It cut against the naïve vocationalism that has justified corporate reach-ins to core educational functions. It clarified that colleges must do what businesses cannot do, according to their own vision and expertise.

I have my quarrels with this Ivy humanism, starting with my dislike for the overdrawn contrast between liberal and practical arts.  I think that the systematic inculcation of deep skills are next on the to-do list of public universities.  But higher ed leaders have so completely lost confidence in the special powers of higher learning that they needed every kind of explanation of why teaching is not a business.  

2. A New Deal for Faculty Governance.  When the chancellor of the University of Illinois at Urbana-Champaign announced that she was pocket vetoing the appointment of Steven Salaita to a professorship that had been approved by every campus agency, she awakened the closest thing to a national faculty outcry that the country had seen in years.  Prof. Salaita remains in limbo, and governance procedures have not been fixed.  But I don't know a single faculty member who isn't now aware of the fall of the faculty, having in 2014 seen faculty be overridden in a main area of authority.   The premature MOOC contracting of  2013 showed admin to be as ready to redesign the curriculum as it is to make all financial decisions on its own. Many faculty who weren't worried about MOOC-mediated governance got worried about the suspension of hiring protocols by senior managers under donor pressure.  

Other kinds of encroachments also got faculty attention.  The newly-hatched Board of Trustees for the University of Oregon planned to write the faculty senate out of the university's new constitution, with the effect of "relegat[ing] university stakeholders to supplicants." Faculty generated an imposing counterattack.  We learned all over again that faculty bodies, once awakened, have more than enough brains at their disposal to stop any train that "has already left the station."

3. Fixing Women's Student Experience.   Even the federal government got involved with the question of what campuses are or aren't doing about sexual assault.  It was impossible to ignore the issue of inadequate protection for victims while pondering  Columbia student Emma Sulkowicz's "carry that weight" thesis project, in which she has carried a mattress with her everywhere on campus until her alleged assailant is no longer at Columbia. (Thank you Gawker for telling us that the alleged assailant is a feminist.)  The Chronicle of Higher Education had a huge spread about "alcohol's hold on campus" ( as in "A River of Booze"), and what it lacked in news value (did you know that some college students drink too much??) it made up in expressing general worry that academics are getting lost in a labyrinth of peripheral activities. Concern about the welfare of women was strong enough to prompt coverage of a study showing that college women are raped less often than non-college women of the same age, which helped embed the campus problem in a wider national context.  Rolling Stone's partial retraction of its "bombshell article" about a alleged gang rape at a University of Virginia frat house did not produce a chorus of triumphant claims that sexual assault is a phony problem.  This year, colleges en masse started to confront women's continuing--if not escalating--physical and psychological insecurity, and the national coverage was a major reason.

4. Contingent Faculty Come in from the Cold.  In early 2013 I wasn't picturing the adjunct faculty group New Faculty Majority appearing before Congress to describe academia's faculty labor problems, but it happened in November of that year, and the momentum carried into 2014.  We're finally seeing proposed legislation requiring colleges to report on their use of part time and non-tenure track instructors.  Adjunct faculty also won an case about their free speech rights and had their status considered in a student debt forgiveness proposal.  They have in general, because of the work of Prof. Maisto and many others, become a major presence in discussions of the future of higher ed.  

Writing in this space, Jennifer Ruth raised the issue of tenure-track faculty complicity in creating a disposable workforce, and named some necessary costs of reversing the trend.  2014 brought unprecedented public awareness of the overuse of contingent faculty and of the shame of their exploitation.  This has already meant increased interest in tenure-track -- non-tenure track (NTT) alliances.  This would improve NTT conditions and reduce the divisions within the faculty that have empowered administrations at faculty expense. Awareness of these possibilities is deeper than it was just a year ago.

 5. The Rise of Educational Quality.  In 2014, student debt hit the wall. The usual justifications of this destructive kludge of a funding strategy are yielding diminishing returns with students along with everyone else.  Adding to the pressure, "the debt is too damn high" was joined by another theme, "debt for what"? Students at the UC Regents meeting in November were eloquent on the subject of the shrinking educational benefits of attending UC that they traced directly to  budgetary "efficiencies" like giant lectures, mechanized grading, and near-zero rates of individual attention.  "We want classes.  We want professors," UC's student regent felt the need to explain to Governor Jerry Brown.   State funding will stay flat without a big push, and detailing the sources and costs of quality education could give state governments their first concrete--and politically charged--reason to reverse years of funding cuts.

I never tire of pointing out that the only reason for the existence of public universities is mass quality--mass access to top quality teaching and cutting-edge research--that puts regular folks on the level where they can genuinely match elites. It's not too soon for faculty to join students in putting the quality back in mass quality, while creating news kinds of quality to reflect on current conditions.  The success students had this year in holding off major politicians like Jerry Brown--and in getting cited in revenue arguments by governing boards--signaled to at least some faculty that it's time to step up. 

6.  Relinking Student Protests and Social Movements.  The biggest recent domestic news has been the protests of the non-indictment of police officers who had killed unarmed Black men, particularly in the cases of Michael Brown in Ferguson, MO and Eric Garner in New York City.  The "Hands Up Don't Shoot" and "I Can't Breathe" protests overlapped with various campus struggles about funding, tuition, debt, diversity, free speech, campus policing, the morale of students of color, and other issues.  These intersecting protests linked the public university to the postwar period of its major development, when society could imagine colleges as offering knowledge for the satisfaction of broad social needs.  In contrast to the narrower mission of serving technology industries, which now seems to many, as the middle classes stagnate, to be just one more way to enrich the rich, the classic social movements increased both the social influence of the university and the quality of its knowledge.  1950s and 1960s voters rewarded universities for this pertinence before conservative elites punished them for it.  The university's golden age and the civil rights movement had different origins but symbiotic aspirations.  This year, parallels among student and non-student movements pointed towards a better common destiny.  

One thing about 2014 was the same as previous years.  I loved the basics of the job-- the research, the teaching, and the learning with colleagues and students. My UCSB students were wonderful. They came through bouts of overpolicing, a mass murder, and ever-mounting levels of background stress; they wrote great crime stories in the detective fiction lecture I just finished, and had all sorts of ideas for educational upgrades that will continue next year.  

In the meantime, many thanks from us for reading Remaking the University this year, and warm wishes for the rest of the holidays. 

Image for U of O

by Jennifer Ruth, English Department, Portland State University

This is the second of a two-part post.  “Why are Faculty Complicit in Creating a Disposable Workforce?” appeared last week.

We need rapidly to increase pressure on university administrators for change. I believe that administrators are slowly digesting the (academic and public relations) downsides of relying on instructors to whom the institution makes no real commitment, but at the same time they are under unprecedented budget pressures. Chris’s post on public austerity spelled out many of these pressures. We desperately need to build a coalition that unites university constituencies in efforts to increase state funding.

But the adjunct crisis is tricky in this context. It is hard for university leadership to translate the ethical and political disaster we’ve all created with contingent labor into any form of public appeal. Most obviously, administrators attempting to explain the deleterious consequences of adjunct reliance might be interpreted as insulting a significant percentage of their employees. It seems inescapable that at least this part of the fight to restore the public university is going to have to be assumed by the faculty, primarily at the level of departments. We can try to mitigate the degree to which the fight is an adversarial one pitting departments against central administrators, but some conflict is unavoidable.

In Part One, I argued that we should insist on the funds for full-time tenure-track positions by withholding the use of cheap adjunct sections. I spent most of my time discussing the inter-departmental psychological obstacles that must be overcome to pursue such a strategy.

Let’s say, though, that your department successfully makes it through the discussions needed to build consensus. You collectively have decided to dramatically reduce adjunct usage as part of a plan to rebuild decent positions. What happens then?

Here, in part two, I explore what such a recommendation could possibly mean given that adjunct usage is baked into university budgets. Were we to do this—i.e., tell everyone expecting adjunct sections that we are trying to get good positions by not putting these sections on our schedules and then do just that—just how big a bomb would be set off?

First, we should consider the scope of our universities’ economic dependence on adjuncts. I’m going to use my own university as my basis so please bear with some details regarding Portland State. State support for the university has dwindled to only 11% of the budget. Our endowment is negligible. Consequently, our revenue is driven almost entirely by tuition. Tuition has been raised repeatedly over the years and, for a number of good reasons, cannot be raised any higher for the foreseeable future.

The professoriate at PSU consists of three faculty groups: tenured and tenure-track, full-time non-tenure-track, and adjunct. If we set aside the (very important) issues of job security and academic freedom, we can consider TT and full-time NTT faculty to be comparably-treated groups in pay, benefits, and work expectations. (There will be objections to this characterization but relative to the third group of faculty – adjuncts –it certainly holds true.) We have seen considerable tensions in a full-time workforce birfurcated into those with access to tenure and those without. The term “2nd-class citizen” for NTT faculty is invoked regularly, which tends to crowd out the more fundamental problem--the existence of our “3rd class citizens.” True to the national stereotype, adjunct faculty are largely invisible within the PSU University community. Full-time NTT serve on Senate, interact regularly with their TT colleagues and administrators, and are represented alongside TT faculty in the union (PSU-AAUP). To the extent that adjuncts’ voices are heard, it is primarily through their union, which bargains separately. Finally, it’s worth noting that a higher percentage of PSU’s professoriate are full-time (TT or NTT faculty) relative to the national average (29% vs. the 20% the Delphi Project cites as typical[1]).

Adjunct faculty deliver roughly 30% of PSU’s student credit hours (SCH) while full-time (TT and NTT) faculty deliver 70%. A whopping 92% of every tuition dollar earned by an adjunct instructor is net revenue compared to 24% of each dollar for full-time faculty. This means that after deducting expenditures (salary, etc.), the percentage of university base revenue contributed by adjunct SCH is 42% compared to 58% by the full-time faculty SCH. Nearly half of the university’s budget is built on adjunct usage.

In other words, the adjuncting that was once rationalized as a stop-gap and ad hoc measure is now the lifeblood of the budget. Were there to be a coordinated effort across departments to stop offering adjunct contracts, the university would go into full-blown cardiac arrest. I understand why the comparisons of adjunct faculty to slaves strikes many of us as both inappropriate and offensive, but one can see from this information why the analogy is tempting. To economically sustain itself, the public university needs people to perform work that it cannot afford to compensate, at least not remotely adequately. It goes without saying that this situation is hardly unique to PSU, though our desirable urban setting in Portland, Oregon probably gives us an unusually large pool of qualified people to exploit.

In this context, what would happen were departments to resist adjunct usage by imposing what amounts to an adjunct strike (albeit one initiated by the professionally-salaried full-time faculty)?  Most likely, they would meet with enormous and frantic resistance. Chairs and directors who won’t sign adjunct contracts could be pressured or forced to step down. Rumors would fly that administrators plan to retaliate by finding ways to shut down participating departments and to deny their junior faculty tenure. Second only to the guilt you’d feel for abruptly turning your back on the talented adjuncts who taught for your department for many moons is the guilt you’d feel about the panicked students piling up in the main office because they couldn’t get the classes they need. Forced to take out more student loans to extend their time in school, they would feel swindled. What university admits students, they would rightly ask, and then makes it impossible for them to graduate?

Who would knowingly go down this road? And yet if we don’t start taking some steps in this direction, nothing will change. It is true that without radical intervention on anyone else’s part, adjunct organizing, where it is legal, will make adjunct usage more and more expensive. This might ultimately land us in a similar place, but how many years from now? We need more good jobs now and some pain in reform is unavoidable. We have been getting something for cheap that allowed us to do things we wanted. That most of these things were worthy, such as keeping students on track for graduation, is beside the point. With no sudden windfalls (from the state or federal government or from donors) on the horizon, we have to bust our way out of this predicament with the same pint-sized budgets that pushed us into it.

Here’s how I suggest we start: Have the discussion within your department. Learn your own university’s numbers and then your own department’s specific numbers. Explain to your Dean that you feel you can no longer in good conscience be complicit in the abuse of adjuncts. Simultaneously reassure him or her that you are prepared to do everything in your power to lessen the “damage” done to all the constituencies that in one way or another benefited from the adjunct abuse.

What is within your power to change will vary widely by department. How your department organized its labor thus far, the disciplinary protocols driving research expectations (and, thus, promotion and tenure), the service needs: all of these things and more will play a part in determining how much room you have to maneuver. The goal, though, is to offer up as much as you can in return for new lines. The idea is that you might have to absorb some of the work previously done by adjuncts but, in return, you will get new full-time lines and you will no longer be complicit in adjunct exploitation. Remind your Dean that you are only doing now what you always should have done and what you will have to do in the future. Remind him or her that if you wait, you will be making these changes on a union’s terms not on the university’s.

Some further steps: Assess the department’s past in relation to the growth in adjunct use. When did your department start the practice and why? Take a fresh look at existing circumstances. Are there faculty who went down to half-time but you never argued to restore the missing instruction in the form of a new hire? Are there people who once carried full courseloads but are now directors of programs or otherwise engaged but you never made up the loss (except by way of adjuncts)? Figure out how you got where you are and what the lost opportunities for new full-time hires were in the past. It is important to document this background.

Find all low-hanging fruit. Are there enough funds for sections that could be bundled into full-time positions before asking for new investment? Are there funds for “perks” (and, yes, I mean heretofore necessities like travel money) that could be redirected? Are there ways to avoid low-enrollment classes? Are you and your colleagues willing to resume advising and mentoring, making a professional advisor unnecessary (freeing a salary plus benefits that could go to a full-time instructional position)? Are there staff positions that could be economized?

Eliminate as many course releases for full-time faculty as possible so that it’s clear that whatever adjunct sections are left over are not there to benefit full-time faculty but are the result of real need. Putting up some of your “own” money is how you buy good will with, build trust with, and minimize the possibility of retaliation from administrators.

This is already more than anybody wants to hear so I’ll stop for now. Believe me, I get why nobody wants to hear any of this. Mounting this full-frontal assault in real life resulted in scorched earth among full-time departmental colleagues, some of whom were old friends. (Weirdly as I’ve discussed for this blog before, the earth was less scorched between the department and the university administration.) It also resulted in a few new tenure lines and a few saved national searches.

Given how far we’ve gone down Contingency Road, the way back is going to be more painful than anyone wants it to be. But the rewards make the effort necessary and worthwhile: less exploitation, better education, internal relations based on improved equity, and a larger contribution to the public good.