UCI May 25, 2018   

We saw in Part 1 that UCI Finance attributes losses to the Schools –the academic core—rather than to the non-core or medical center activities associated with research and various auxiliary services.  We also noted that in FY23 UCI needed to find $132.3 million in institutional funds to cover research costs. One result is unfortunate: dramatic cuts are coming to the core. 

 

Non-core and UCI Health may be conducting layoffs as well, but I haven’t seen any indication of this. The UC rule of thumb has been cuts to the educational core come only as a last resort.  It’s often honored in the breach, and I don’t see that UCI is following it now. 

 

UCI’s core funding is governed by a new Budget Model and multi-year planning process. It was tried out in 2024 -25 (FY25) and has been modified for the upcoming year (2025-26 or FY 26). 

 

I certainly urge UCI folks to Know Your Budget Model by reading this page carefully, especially the Draft Framework (FY25) and Final Model Comparison (FY26) at the bottom. As former UCSB faculty I am retroactively jealous that you have at least these materials publicly visible for reading and discussion.

 

I’ll mention three things about the Final Model for this upcoming year.

 

            1. the student metrics are intelligently skewed towards department workloads rather than majoring.  Fields that are losing majors but still have lots of student interest as expressed in attendance, as do many humanities fields, have their teaching workloads acknowledged in the form of Student Credit Hours (80%).  “Enrollments” (the standard UC wrong name for “majors”) are only 10%, and degrees granted are another 10%.  

 

UCI people will know things I don’t about how this sausage was made, but as such things go it’s pretty good sausage.

 

            2. Central administration will now “cover 70% of each school’s average faculty salary and benefits. Remaining faculty, staff, and operating needs are supported through other mission-based budget model components (e.g., student metric-based and other core and non-core sources).”  

 

This is a modification of Responsibility Centered Management systems from the 1990s that have settled in all over.  They were to replace incremented budgeting by tying a unit’s ability to spend to that unit’s ability to earn money. RCM has various negative effects and this 30% version ties School revenues to (1), the student metrics.  Since the 70% and the other 30% of tenure-track faculty salaries and benefits have to be paid, shortfalls will affect non-tenure track “faculty, staff, and operating needs.”  But there’s a base of 70% of faculty payroll—tenure-track or “Senate” faculty, I presume.

 

            3. The FY26 model introduces a new factor, “Student Metric-Based: Differential $/Student.”  UCI Finance has taken disciplinary benchmarks from the National Study on the Cost of Instructional Productivity at the University of Delaware and applied them to UCI Schools.  (Falling participation has caused the sponsor, the Higher Education Consortia, to cancel the cost study after the 2024 results are published this month.)  

 

(1) and (2) by themselves would produce a quasi-egalitarian revenue pattern for instruction. The Schools of Engineering and the Humanities, for example, would each get 70% of payroll and then get the same amount per (weighed) student to cover the other 30% of costs—so more if they teach a lot of students and less if they don’t. Engineering would have much additional revenue based on Contracts & Grants income mainly not available to School of Humanities fields, plus ICR revenues, corporate contracts, and the like.  Higher facilities and equipment costs for engineering vs. humanities instruction was covered in the old incremental budgets based on past practice. However, high-cost schools (Arts if it has lots of studios), or Engineering if its extramural research has facilities and administration needs that run up losses (see Part 1), would require subsidies from central administration. These subventions are in my view completely legitimate in higher ed. Once the myths are punctured and everyone is used to the conversation, subsidies could be quantified and discussed on campus. 

 

But the inclusion of (3), the student FTE weighs, means that instructional revenues will not be equal. Some schools will get less per student and others will get more. This was always the case, but inequalities tend to get more extreme under pressure. Inequalities per student generate equity problems for students. A great way to get less money back in your education than you pay in tuition is to major in Social Ecology rather than in Physics, Bio, or Engineering.  

 

Benchmarks exist to identify real empirical costs and to conclude that the Social Ecology student isn’t getting screwed because the same quality education costs more in Engineering than it does in Social Ecology.  This claim has been an object of controversy in the literature for decades (an early classic is Michael Power, The Audit Explosion (1994, expanded as The Audit Society)). Social ecology might have reached levels of educational impact that it cannot under a benchmark that is basically an aggregate of past funding custom.  

 

This raises the question of why UCI Finance would use a benchmark rather than study its own units and engage in discussions with faculty, staff, even students about costs. Faculty and students would have views about what there aren’t able to achieve cognitively that they could with 25% smaller courses or whatever it is.  The discussion is more work and cost, of course, but it would involve the campus in setting educational goals and then structuring budgets around education.  

 

However, external benchmarks have a couple of major managerial benefits.  One is avoiding exactly this kind of institutional discussion of resource equity, which involves distributed governance.  Another is that they are used to (re)distribute resources unequally—allegedly to reflect unequal needs.

 

Here are some figures based on the best current data that have come across my desk. 

 

Figure 1

 

 

 

These are UCI’s 14 Schools, with mostly student-based revenues (state, tuition, Student Service Fee, plus some research based Indirect Cost Recovery money (mainly in STEM Schools), plus some subsidies to soften budget cuts in some places, also from the same sources.  Cuts are not so far off the 3.5% percent the UCI Provost said would be the campus baseline. Generally the changes from 2023-24 (FY24) to this past year (2025-26, or FY26) don’t look so bad overall—compared to the budget mayhem in federal research if the U.S. Senate doesn’t block it.

 

Shifting to per-student funding tells a different story.  I believe that the exercise is to be applied to the 30% of School funding based on student numbers, but the figures used are School totals, so 100%. 

 

Figure 2   

 

 

 

 

Here the results of what seem a small reduction in overall core budgets (3.5%) are dramatic.  All Schools get hit. I don’t know how these per-student reductions could be implemented. Student instruction would be severely damaged, as would the faculty and staff that would undoubtedly be fired under this kind of a scenario.

 

Where do these cuts come from? It appears that the Delaware benchmarks are used to assign funding ratios depending on how much higher a particular UCI School’s State/Tuition/Other budget for FY24 comes in above the benchmark.  It is assigned a ratio in relation to new  gets a ratio which is used to give each School a new baseline of per-student funding. The reductions are startling: from $16,869 as weighted per-student FTE income at the end of FY24, to $8434 as a target per-weighted-student average in the year just ended (FY25).  That is half of the previous year.  The target reduction for the coming year, FY26, seems to be $6,825 per weighted student. 

 

The differences in marginal changes are also striking. If you compare Figure 3 to Figure 1 you can see that the percentage changes are mostly in single digits.  But the variance deserves discussion.  The educational effects need a full airing.

 

 

Figure 3

 

 

 

Why is this happening?  My main hypothesis is that this is how you use core funds to generate a surplus. You can move it from one School to another, and from core to non-core.   UCI does have to find $132 million or so to support unfunded research costs. 

 

This is the place where I’d normally issue a call to all university parties to address root causes, which always includes rebuilding the state funding that UC admin has basically given up on.  

 

But I don’t have a clear picture of where this model really wants to set School per-student expenditures, or why it set these very low baselines, or how a number UCI Schools can survive it without a messy array of one-time subsidies that keep getting renewed. So I urge my UCI colleagues to find out.  

Serpentine, Hyde Park London May 18, 2025   

UC Irvine is facing major cuts to its academic core, bigger in some places than others.  UCI lecturer Trevor Griffey analyzed them as the state budget was passed by the legislature. This post started life as the introduction to my analysis, UCI Part 2, but it has taken on a life of its own. 

 

As I mentioned in Part 1, there’s a national pattern at work, which is to assume and accept an even worse austerity norm – hyponormalization—rather than taking Trump’s assault on the foundations of the knowledge system as an opportunity to confront and change the university’s contradictory political economy. 

 

The confrontation will mean critique of various theories of the costs of college instruction that shape the thinking that operates universities. These theories are mostly bad, yet they are always with us.

 

One is that human teachers are inherently inefficient.  “Baumol’s cost disease” is often trotted out, in which productivity can’t rise in services as it does in manufacturing because it’s harder to get rid of people (Baumol famously noted that a quartet needs 4 musicians, not 3).  

 

Another theory is that U.S. college instructors are pampered elites with tenure and above-market salaries and benefits. Efficiency requires that their pay, benefits, and protections be dramatically cut. 

 

The cure for both is the same: automate teaching (digitalized extension courses and course management services in the 2000s, MOOCs in the 2010s, “AI” in the 2020s) while for the remaining humans sing “Yippie Ki Yay! Adios! Sayonara! Auf Wiedersehen! Au Revoir!” to faculty autonomy so you can treat professors like any other waged employee.  That’ll fix things.

 

There are better theories.  A third says service costs rise because the “standard of care” rises, which is a good thing. This was Baumol’s real point. Rivalry does increase costs, meaning marketization can raise rather than lower costs: If UCLA has a dedicated Learning Center than UCI will eventually have a dedicated Learning Center. 

 

But intrinsic improvements raise costs to match quality of service, not just a commercial rivalry. When a dentist uses a microscope rather than a magnifying glass during a root canal procedure, it reduces the patient’s pain while also shortening recovery time. So all dentists who perform root canals will need to shift to microscopes sooner rather than later. 

 

The same happens in every kind of classroom and laboratory space at universities: In the 1990s and early 2000s, every campus building needed to be hardwired for the internet. Then every campus building needed to be converted to wireless. The same goes today for lab and studio equipment. Employers like to complain that college grads aren’t ready for plug-n-play into their available jobs, but were that possible or desirable, a prerequisite would be cutting-edge hardware and software that no one is funding public universities to buy. Advanced mathematical and language skills are best taught in small tutorials, but students can’t afford this high-quality attention out of pocket.  The outcome of 2025 college should be smarter graduates as they face an unstable post-AI economy, but that will take budgetary increases coming from an intensity of budgetary campaigning and then on-campus budget intelligence that doesn’t exist today. 

 

A fourth theory, compatible with the third, is that instructional costs are heavily influenced by a university’s accounting practices.  Central administrations have the power to retain a chosen portion of revenues generated by any unit on campus.  Students bring tuition and state funds to their major and all the courses they take. But these funds arrive on campus not through students but through the chancellor or president and their budget offices, and are distributed according to formulae those officers create.

 

To take a dramatic example, Middlesex University in London closed its famous department in continental philosophy on the basis of an alleged chronic deficit that turned out to be induced by a central administration’s tax on the department—a tax of 55% on the department’s revenues. (That unit, the highly-ranked and more importantly, the intellectually distinctive Centre for Research in Modern European Philosophy (CRMEP), is now being pushed out of its subsequent home, Kingston University.)  

 

A second example is yesterday’s guest post from the Australian National University. Senior managers construct financial requirements independently of analyses of teaching and research aims—and of their quality and socio-intellectual effects-- that take place in departments and academic disciplines. The financial requirements become academic ones.  Finance thus controls academic freedom, and non- or ex-academics decide root possibilities for academics.  

 

In theory, there could be collaboration. Finance and academics could enjoy their division of labor in the context of iterative dialogue and shared authority over decisions. Genuine shared authority would allow a dean of humanities or a chair of Political Science to reject their budget and restart negotiations without getting fired from their post.  The distinctive skills of professional staff—with budgeting, for example—would work in complementarity with the faculty’s deep substantive academic expertise.  

 

In my experience, this never happens. Budgets are formed in isolation from the academic world of the campus, and then imposed upon it. 

 

The rule of academic finance has been TINA, Thatcher’s framework of There Is No Alternative.  Sure, this doesn’t work as advertised, TINA says, and it’s hurting you and what you do, but There Is No Alternative.  End of discussion.  

 

This keeps happening even though, for decades now, complex and top-down budget architectures regularly generate austerity, poverty, shortfalls, layoffs, closures, or at a minimum a general stagnation in quality of service in particular units on campus. 

 

There’s tragic irony here. The university is the place where professionals seemed to have won some (limited) self-determination in society, but then they lost it. 

 

There was no golden age, especially for women and faculty of color. But votes of no confidence used to matter, even if the senate’s Committee for Planning and Budget never really decided anything.  But the professoriat, that class “between labor and capital” named by Barbara and John Ehrenreich as the “professional-managerial class,” didn’t do the institutional confrontation and political-economy reconstruction that would have led to real power.  The professionals’ focus was too narrow, too internal, too self-interested, too white-male, too intellectually ethnocentric), and also too passive, too disconnected from the social movement world’s active engagements with power that would have enabled the proverbial march through the institutions.  “They,” the tenure track faculty, assumed they were doing well without budget power and political unpleasantness. 

 

The PMC deal was steadily withdrawn for the professional majority starting decades ago—right as many more people of color and women were entering the academy. Professors lost their management allies (and most of their professional staff allies, who saw which side controlled money, power and their employment). Yet professorial strategies haven’t shifted from the personal side-deal to collective organization. 

 

This is a historical realignment of the place of knowledge workers in Western societies that Trumpism another other trends is making post-knowledge societies.  Knowledge workers, especially academics, need to study, analyze, decide, oraganize, and fight like they never have before, not even in unions.

 

More narrowly, nothing will change about the budgeting I’m in the midst of discussing unless the professoriat breaks with this past and becomes fully engaged with their own institutions.  That will mean both collaboration and confrontation for which they have little training, but which can indeed be learned.  

Australian National University    

by Prof. Kylie Message-Jones, The Australian National University

The Australian National University (ANU) has said it needs to reclaim a budget shortfall of $250m. To do its bit, the College of Arts and Social Sciences last week published a roadmap to meet the University’s goal for its areas. Its change proposal boils down to a list of cuts that will damage staff, students, as well as local families, communities and economies. 

 

It might help to put the ANU’s situation in context. Although ANU is a small institution by Australian standards, with roughly 4500 staff and 22,000 students, it has historically been high performing. In the recently released QS 2026 World University Rankings, ANU, a member of the prestigious Group of Eight network, slipped slightly to come in fourth out of 36 Australian universities and 32^nd globally.

 

ANU is based in Canberra. The university’s staff make up roughly 1.2% of Canberra’s population, and if students its representation increases to about 6%. But many more Canberrans are ANU alumni or have a child or relative studying or working there, meaning the proportion of Canberrans who have a direct interest in ANU is significant. Job losses will have an economic, educational and cultural impact on the city.

 

Equally important is the effect the proposed changes will have on ANU’s core functions. How will ANU continue to meet its national remit – and defend its ongoing receipt of the National Institutes Grant – if it is cutting areas that contribute directly to its mission? 

 

This is not an abstract question because ANU was founded in 1946 in the national capital to be unlike any other university in Australia. Its vision is to develop national unity and identity, improve our understanding of ourselves and our neighbours, and provide world-leading national research capacity and education in areas vital for our future.

 

ANU receives an annual “block grant," which in 2023 was $220,367,000. Called the National Institutes Grant, this funding was endowed to ANU in 1946 to help it deliver on its special mission.

 

The block grant has historically maintained and evolved excellence in research, supporting the development of areas that would not gain funding from sources such as student fees. This has allowed the University to “develop sovereign capability on behalf of the nation against the swings in student demand and popularity”. It provides research, as well as research infrastructure, used by people who otherwise have nothing to do with ANU. 

 

The Humanities Research Centre is one of the areas supported over the years to provide research support, excellence, outreach and training. It was established in the early 1970s to have – like ANU itself – a unique function. 

 

Although the Centre is located in the College of Arts and Social Sciences, it provides a significant outreach and engagement hub for the whole University by hosting international and interstate academics from a range of disciplinary and interdisciplinary fields. 

 

Up to 40 paid and unpaid visitors per year have historically undertaken research projects and written publications at ANU, bolstering the University’s impact, reputation and funding. They have built collaborations, mentored local staff, given public lectures, run workshops for PhD students, and provided a pool of international expert examiners for student assessments. They also positively report on ANU for world university ranking exercises. 

 

The Centre has a genuinely international reputation, having attracted some of the world’s most famous scholars over its 50-year history. To this day it is the only centre of its scale and impact anywhere in Australia and the Pacific. It has successfully attracted external funding for the benefit of its programs.

In the last three years the Centre has focused on relationships with national cultural institutions in Australia and around the world. It has run ground-breaking courses for graduate students with the National Museum of Australia. It has run public film screening events with the National Film and Sound Archive of Australia, and public sculpture walks. It has directly contributed to the establishment of the Vietnamese Museum Australia. It has hosted First Nations people from around the world with Indigenous communities in Canberra and across Australia. It has made podcasts and radio shows showcasing ANU’s research and research infrastructure. These activities have led to recruitment of new students and extended the University’s connections with diverse communities. 

 

These functions are central to the mission of ANU and deliver on its funding obligations.

 

The change proposal put forward by the College of Arts and Social Science’s executive proposes to disestablish the Centre. The Centre’s functions are not being performed anywhere else in the University to a remotely equivalent degree. They could not be replicated under the proposed new structure. This means ANU would lose a critical research incubator that has served its mission successfully for over half a century.

 

The cuts are rationalized on purely financial grounds. However, the HRC was already running on a shoestring so any savings made from the destruction of this core piece of humanities infrastructure seem no more than a drop in the ocean.

 

According to ANU reports the University spent $1,487m in 2023. In 2024, the College of Arts and Social Sciences spent $64.4m. Even at its most well-funded, the budget for the Humanities Research Centre in 2023-24 was just 0.62% of the whole College Budget.  This covered a director's salary, visiting programs (including travel and accommodation) and all activities. 

By 2025, the activities and fellows budget was reduced to zero. 

 

The current proposal, which also abolishes other centres and ends research projects in the College, represents a retreat by ANU from its national mission--and its claims to international standing and excellence. The result will only be a further reduction in the University’s capabilities and reputation, and a withdrawal by ANU from many of the most important conversations being carried on around the world today.

 

The College executive claim that extensive consultations have been undertaken to inform the development of the change proposal. However, I am yet to find anyone who agrees this has been the case, including amongst the hundreds of visiting fellows, alumni and countless members of the Canberra community who have benefitted from the research impact and educational opportunities the Humanities Research Centre has delivered.

 

The cuts will undermine the ability of ANU to deliver on its mission. Claims to the contrary are false and in my opinion should be rejected. 

Santa Barbara on December 24, 2023   

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

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

 

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

 

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

 

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

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

 

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

 

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

Figure 1

 

 

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

 

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

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

 

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

 

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

 

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

 

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

 

At Cal Matters, Mikhail Zinshteyn has reported,

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

 

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

 

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

 

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

 

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

 

Figure 2

 

Here you see several lines.

 

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

 

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

 

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

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

 

Note that none of this data is corrected for inflation.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Figure 3

 

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

 

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

 

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

 

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

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

 

That was the last update on his page.

 

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

 

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

 

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

 

And so on. 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

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

 

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

November 9, 2022, Hyde Park

This is my ISRF Director's Note for November. Higher education's main response to political adversity has been accommodation. My comments on this here are relevant to the U.S. as much as the U.K. situation, including the data on teaching and research losses.

The Democratic and Labour parties regularly hint around about breaking with neoliberal austerity to build an equitable economic order, and then they don't. There are lessons for rebuilding in 2025 as well.  

Let’s say you work for Disney, and you’re part of the group that CEO Bob Iger instructed to “fix streaming.” By “fix” he meant, keep it from losing money in every quarter for a total loss of $4 billion in 2022. Bob offered a public hint about how to do this: “Basically we invested too much.”

You come up with a simple plan:

1. You invest less in new content, avoid challenging and therefore risky content, and cheapen existing content. You fire some people.

2. You raise prices, a lot.

Source: The Honest Broker.

3. You plan how to cut 100% of the loss over 2 to 3 years.

4. You ignore critics who call this an Endgame strategy and post rude charts about paying more to get less while subsidizing your creative decline.

The result is that 1 + 2 = 3. You do enough enshittification of your product and workforce (1) while seriously jacking up prices (2) so that you achieve (3), the actual ending of all your loss-making. The culture gets worse (4), but you achieve your financial goal of revenues equal to or greater than expenditures—about break-even in just two years.

Source:  The Honest Broker.

How does this compare to higher education policy in England and Wales?  

1. You have already been investing less in new content, avoiding challenging and therefore risky content and cutting existing programmes of that type. You have been cheapening existing content with larger classes, narrower module choice, and the like. You have been firing people.

2. You tripled your prices in 2012, but accepted simultaneous cuts in public revenue and the benefits are gone. The Labour party has just granted you a 3.1% fee increase for home students, which will increase their 2025 fees by £285 to £9,535. This will increase your teaching revenues for these students by £390 million per year. (The only other change is a minor increase in the amount students are allowed to borrow for maintenance.)

3. Instead of making up 100% of your loses, you plan to shrink them somewhat.  You lost £1 billion teaching home students in 2021-22, so with the 3.1% increase you can cut that by £390 million, or about one-third? Sadly, no: that inflation adjustment just keeps you from losing an additional £390 million on this year’s teaching . You’re still losing £1 billion pounds a year (more since that 2021-22 figure, and National Insurance rises will take £372 million of that £390 million). Your plan, in effect, is to reduce your home teaching losses by 0 percent!

4. You ignore critics who say your 1 + 2 = 0 as a solution for the university and you don’t address their concerns. You stay caught between the media, which exclaims that the £285 rise after an eight-year freeze “is a further test of students’ faith”, and universities, as when Sussex VC Sasha Roseneil states the fact that “unfortunately neither students nor universities will find adequate solutions in these modest uplifts.” Domestic teaching revenue remains nearly one-fifth below what it was for someone starting university in 2012-13. And the public maintains their perception that higher ed is unable to manage its affairs.

In the Disney case, enshittification makes you solvent, meaning you can theoretically avoid the Endgame strategy. (Ted Gioia, the source of those charts, is pretty sure you won’t, and indeed the logic of shareholder capitalism cuts against mature companies reducing their returns on investment by investing in better product.)

In the British university case, enshittification leaves you in the same hole you were in before.

What would work better? Not turning universities into corporations like Disney, but the opposite.

They should state their actual financial needs as required by their essential public functions, and then set up a plan with government to fix 100% of the shortfall between what the functions cost and what they can raise without further harming their students.

Take this HEPI chart from one of my previous notes.

Figure reproduced from Higher Education Policy Institute.

Home university students need to be taught properly; universities need a further billion pounds a year to do that. Government should supply 100% of that loss with a central grant, booked as an expenditure like schools or NHS.

The Institute for Fiscal Studies reported that “in 2023/24, £1,034 million was allocated to fund the teaching of high-cost courses, including medicine, dentistry and other laboratory-based courses.” This amount needs to be more than doubled, to fund the shortfall on the rest.

Similarly, in 2020-21 research lost nearly £5 billion. Research is a public good and national priority for all political parties. The government should fully fund the indirect costs of research, fixing 100% of that £5 billion loss. The sector could construct a five-year plan to achieve this.

Another chart from the same note:

Figure reproduced from Higher Education Policy Institute.

These shortfalls between student need and student funds are ridiculous. They are not shortfalls in grants but in the right to borrow. Universities should press government relentlessly to fund full maintenance costs, including restored grants for lower-income students.

There’s always great agony about the public supporting students, since as graduates they are cast as an elite. This isn’t true of most graduate salaries, but more importantly it neglects the public benefits, pecuniary but especially non-pecuniary, that all of society reaps from ever-larger numbers of highly educated people.

The standard view also neglects the reality that students are subsidizing the public with their fees. Not yet published calculations by our research partner James Brackley show students paying about five-sixths of the (declining) funding for their instruction.

Figure used with permission from the author.

Government grants covering home student shortfall would go part of the way towards equitable sharing of the costs of benefits that are social as much as they are individual.

Full public funding would make sense to the public if higher education organizations, like Universities UK, tied it directly to better student learning, more and higher quality research results, and better public benefits.

When universities pitch graduate salaries, commercial spin-offs, and other private benefits while ignoring the need for much greater public contributions, it is an Endgame strategy. But it wouldn’t be hard to replace.