Next year's tuition increases are coming in, and the average seems to be between 3 and 4 percent  at elite private colleges and universities (Stanford, Bryn Mawr, Princeton, Dartmouth, MIT, Ithaca College Marquette). Tuition will be up across a wider range at publics (9 percent in Colorado, 10 percent in the Louisiana and North Carolina systems, but no increases at Purdue, the University of California or Cal State).  The Consumer Price Index is forecast to rise around 2.3% for 2013.

The national outcry against the tuition and student debt escalation has had no obvious effect on the sector's longstanding tendency to raise tuition at 2-4 the rate of CPI. See the gruesome visual below.

The public has an obvious right to be upset about absent college affordability at a time when college remains the necessary condition for a decent stable income while at the same being no longer sufficient.  Students are taking on debt to buy a high-priced ticket to "Intern Nation," nicely covered in the New York Times piece over the weekend on the "No-Limits Job" that college grads are now heir to.

What's bad for students has been good for Wall Street.  The Wall Street Journal reports this morning that "Student-Loan Securities Stay Hot" even as student default rates climb.  "Demand for the riskiest bunch" of student-loan backed securities sold last week by SLM Corp, formerly known as Sallie Mae, "was 15 times greater than the supply."  The riskiest securities have the highest yields, but investors don't have to care, given the special impossibility of defaulting or erasing student loan debt.  Meanwhile, the New York Fed reports that 90-day delinquency rates have risen from 24 to 31 percent since 2008, and that student debt nearly tripled in the last eight years.  When the Fed breaks out the numbers for Intern Nation--graduates of the past eight years--they found that "the delinquency rate jumped to 35% last quarter from 26% in 2008."

The only remedy for current debtors would be widespread debt relief.  Movements led by Strike Debt are seeking exactly this (see a discussion in Dissent, an interview with a leading organizer, NYU professor Andrew Ross, and a Forbes view with some good links).  But I know of no support from university administrators for student debt relief, even as tuition hikes continue to inflate the debt bubble.

For future students, budgeteers and their political bosses are looking in the wrong place to cut costs--namely, in undergraduate instruction. Good evidence for this came last week from retired UC Berkeley physics professor and independent UC budget maven Charles Schwartz, who has published an important update of his estimates of the cost of instruction at UC.

The basic problem is that universities have always bundled various costs together, so that the costs of instruction are hard to define.  The mainline higher ed accounting body, the National Association of College and University Business Officers (NACUBO), continues to support this bundling.  Other organizations, the Delta Project most notably, have separated  instructional from research costs (e.g. Figure 9), but methodological complexities remain.  Public universities like UC do estimate the per-student "cost of education," but research and other non-educational expenses appear to inflate the alleged instructional cost.

To take Prof. Schwartz's example, the University of California, UC's Office of the President estimates educational cost per student as $17,400 (2011-12). Average tuition is a bit over $13,000 per year, and up to a third of that is returned to financial aid, so UCOP estimates that net student tuition covers just under half of instructional cost. Prof. Schwartz, in contrast, estimates that average cost per student is actually $6910.  This is 40% of UCOP's estimate.

Prof. Schwartz concludes as follows:

• From the perspective of UCOP’s Budget Office, looking at the cost to UC: UCOP says Student Fees (net) cover 49% of their cost and I say it is 127%.

• From the perspective of students and their families, looking at the sticker price: UCOP says Student Fees (gross) cover 74% of their cost and I say it is 191%.

These low instructional cost estimates should lead to two things:

First, analyses and critiques of Prof. Schwartz's methodology and findings.  His many budget reports, extending back at least two decades, are works of scholarship in the sense that they define their methods, identify and publish their data, and explain each calculation on the way to the conclusion.  They deserve to be treated with the academic standard of rigorous peer review.

For example, Prof. Schwartz uses Activity Based Costing, and his estimate of instructional cost depends in part on a time-use survey that suggests that UC faculty devote 21% of their time to teaching.    I think this estimate is low as a UC average: it may be two or even three times higher for ladder faculty outside of the natural sciences and engineering fields that have lower teaching loads to reflect their obligations to their sponsored research.  A recalculation using higher teaching share estimates would raise the per-student instructional cost somewhat--though the adjusted figure would remain far closer to Prof. Schwartz's than to UCOP's.

Unfortunately, this series of reports has been ignored rather than critiqued by budget officials.  The Academic Senate has been part of this syndrome--and I include myself in this observation during the period when I chaired Planning and Budget committees on my campus and at systemwide.  Research faculty correctly believe that teaching and research are intertwined, meaning that research expenditures wind up back in the classroom and should be counted in part as instructional expenses.  I believe this too--as does Prof. Schwartz, as far as I know--but this would lead to a further adjustment of his cost estimates.  If we kept his methodology and make these two adjustments, instructional costs might get up to around $9500 / per student. (I'm eyeballing here, not re-running all the details).

This is still well below UCOP estimates and below in-state tuition.  So Prof. Schwartz's basic argument would remain intact.  We should be having this debate about actual instructional costs, starting with the Schwartz calculations: it is a major national policy and political issue.  And if students are racking up life-damaging debt to pay far more in tuition than they get in teaching (broadly defined)?  This is exactly the impression senior managers hope to block by avoiding debate, but this strategy stopped working long ago.

Second, bloated teaching cost estimates have fueled the national bid to fix colleges with technology. Bob Samuels has made this point in so-far futile efforts to instill realism in state agencies about real university costs. Are MOOCs supposed to save UC 15% at a $17,400 per-student instructional cost? What percentage of courses need to be removed from faculty and grad students to close UC's looming $1.5 Billion structural deficit? What if UC spends half of what UCOP says on teaching?  So far, these questions aren't being addressed at all by MOOC advocates like Coursera's Daphne Koller, whose presentation to the Little Hoover Commission was financially data-free.  The items on Prof. Samuels' list of real cost drivers have far more political clout and cultural capital than teaching does, and  it is largely for that bad reason that they aren't being seriously addressed.

Online boosters need to be held accountable to actual current teaching costs, not to ones that have stayed inflated for political reasons.  At the moment, the debate based on opaque teaching costs is offering students the worst of both worlds--no meaningful containment of the real costs that drive tuition hikes, and more austerity for their instruction.

The undeniable crisis of student debt has focused political debate on the question of college costs.  Unfortunately state and federal politicians have concentrated their rhetoric and policy proposals on efforts to limit funding for Higher Education (as in arbitrarily constructed tuition limits or the imposition of state funding cuts); the search for technological ways to avoid broader social choices (as with online); or efforts to limit what disciplines students have access to (as in Rick Scott's plan to impose financial penalties for choosing certain fields of study).   Although the attention to student debt and the burdens rising tuition places on families is overdue, the conventional wisdom all turns in one way or another on the reduction of access to quality higher ed for students in the future (either by limiting their credits, driving them through college more quickly, denying them the residential experience, or simply failing to fund colleges and universities adequately).  As with so much else in our austerity addled age, the policy response to crises created by the stagnation of wages and the retreat of the social state is to tell people to settle for less in the future.

For nearly half a century, California sought a different path: codified in the Master Plan (although predating it), the state committed its resources according to the notion that it could create and sustain a system of higher education that would, in turn help ensure mass access to quality higher education.  This mass education, in turn, helped to enable California to sustain an economy based on knowledge industries and human creativity.  This vision collapsed in the last decade.  To revive it would take political leadership with a commitment to renewing California's commitment to broad based prosperity.

Unfortunately,  Jerry Brown remains the once and future Austerian.  For whatever reason, oedipal or ideological, Brown has made his career out of the notion that people should expect less from their lives in society and that the government needs to minimize its efforts towards mass prosperity.  While in the 1970s, Brown could plausibly link these notions to emerging ecological concerns now he simply mimics the idea that the disordered economy of finance capital cannot be challenged but simply borne.  Under the name of fiscal prudence he doubles down on the limits to access and quality for the working and middle classes while refusing to challenge the inequalities that helped create the recent financial crisis.

Brown's commitment to austerity can be seen in his budget proposals for Higher Ed.  Although it is true that Brown declares that the state needs to "reinvest to improve the quality and affordability of California's system of Higher Education" (36) his actual policies belie this assertion.  He does propose funding increases over the next few years but his 2013-2014 budget will leave both UC and CSU each down $600 Million in state funds compared to 2007-2008. (35)  And even if the state does fulfill Brown's promises, the result after several years will be funding for UC and CSU at roughly 2010 levels--despite the rise in mandatory costs.  Brown's budget proposals will lock in a permanent underfunding of CSU and UC by the state.  In effect, Brown's vision of reinvestment is sustaining Higher Education in its present diminished state.

Sadly, Brown represents the consensus in Sacramento.  The recent Legislative Analyst Office's analysis of Brown's Higher Education proposals doubles-down on its most egregious assumptions and austerity proposals.  The LAO report criticizes Brown both for his commitment to (limited) funding increases (17-18) and opposes Brown's proposal for a tuition freeze in part because the LAO thinks that it will lead to dramatically increased tuition in the future and in part because the LAO thinks students do not contribute enough to the cost of Higher Ed. (30-31)  Instead of a tuition freeze, the LAO proposes that students be expected to cover a certain percentage of educational costs and that tuition rise or fall according to that standard.  If Brown admits a funding problem but is unwilling to solve it, the LAO does not admit a funding problem to begin with.

Central to their position is a joint refusal to acknowledge the substantial difference between state funding and tuition as the economic base for higher education.  Both Brown and the LAO treat the transfer of burden from the government to students as inevitable and rational (although they do want to argue at the margins about what those burdens on students should be).  In keeping with the dominant economic thinking of the last few decades they see no difference between public and private debt--or more precisely they seem more worried about public than private debt despite the reality that private debt is undermining the economic recovery.  But just as importantly--and on this point, they support the austerity bubble-- they cannot imagine demanding of corporations or those who have benefited from increasing inequality to bear their fair share of burdens.

But as dangerous as their approach is in general--in the case of higher education it is particularly self-defeating.  Both the Governor (39) and the LAO (24-26) emphasize the need to improve the state's record in enabling students to complete their degree work.  Both however overlook one substantial reason that students take longer to complete their degrees than in the past--the hours of employment they take on in order to pay for their part of their college education.  As is typical of austerity economics, the Governor and LAO's blithe acceptance of the necessity of decreased state support has shifted the burden onto students, compelled them to spend more time at jobs and less time as students, and therefore slowed down their progress to degree.  No fiddling with "bottleneck" courses will compensate for this time and labor.

Indeed, an understanding of the significance of this shift of burdens reveals how shallow the Governor's understanding of Higher Ed is, and how problematic LAO's critique of his suggestions are.  The telling point, not surprisingly, is their shared belief that online education will reduce instructional costs.  But what they fail to acknowledge is that they have no genuine means of judging instructional costs.

Let's take the LAO because they have the virtue of laying out their thinking.  The LAO insists that spending per degree is high in California (11) and assumes that that is because of instructional inefficiency.  But their position is based on a set of unjustified slippages.  First, they take the total core funding of the university systems and the number of degrees and divide the former from the latter; then compare costs to other universities in the same institutional category.  They do not calculate different costs of living, of materials, and of space in California compared to other places.  Even more importantly, they assume that dividing total revenues by degrees provides a meaningful window into instructional costs and efficiencies.  But as we all know that is a poor proxy; there are far too many other sources of costs (pertaining to administration, compliance, research, student services, etc) to allow the state government to assume that the instructional costs of California Higher Ed are unusually high and to use that as an excuse to reduce students shared learning experience while increasing their burdens.

In response, the University systems must do more than simply thank Brown for not cutting them further.  In the case of UC two things need to be done to start a new debate on Higher Ed.  First, UCOP must stop allowing the State to treat public funds and student tuition as interchangeable sources of revenue.  It may be impossible in the short term for the University to change this dynamic but it can at least refuse to allow the logic of this displacement to go unchallenged.  If UCOP doesn't do so then its purported concern for student's burdens will ring increasingly hollow.

But the system-wide Academic Senate has a role to play as well.  For too long, faculty have allowed the conflation of instructional costs and institutional costs to go unchallenged.   The Senate, admittedly, has limited power.  But its system-wide committees do have oversight functions and they should seek to press the administration (both in Oakland and on campuses) for a fuller accounting on costs.  Doing so will not cure our problems--indeed it will likely only open up difficult debates about priorities.  But by insisting on a clearer accounting of costs it will enable Faculty to reassert the centrality of the instructional mission to the University.  If we cannot do that we may find ourselves marginal to the Institution itself.

Does California, or any other "knowledge economy," want to have public research universities, in the sense of paying for them?  We have reached a point in the ongoing higher ed crisis where this is a genuine question.

By "research" university I mean one that conducts research across the disciplinary spectrum and that has the doctoral programs on which research depends.  But I also mean, for the state's undergraduates, a university that connects students to brand-new knowledge and thus to tomorrow's skills today.  

Putting regular folks on the technological, social, and cultural cutting edge is a unique and fragile--and enormously valuable--activity.  That is what public research universities uniquely do.

This week's Legislative Analyst's Office report on Gov. Jerry Brown's higher ed budget proposal displayed the LAO's traditional dismissal of the research university's interest to the state. But they are not alone. The recent California Higher Education Summit, MCed by KPPC Airtalk host Larry Mantle, also mounted a direct challenge to the value of the category public research university.  We have posted a base transcript of the exchanges between Mantle and UC president Mark Yudof (thanks to UCSB's Alysse Rathburn). 

Larry Mantle began the discussion by noting that the Master Plan was "the model to which everyone aspired.  For extremely low, or even no tuition, students had access to one of the three systems."  The frame is what I like to call mass quality, in which first-rate educational skills are not reserved for an elite but are distributed to every income level in the population.  

The opening question was about tuition hikes, and Mr. Mantle was so concerned about rising costs leading to declining access that towards the end he asked directly whether we could still say that the master plan system still existed.  One answer he got was "not in practice."  Around Minute 41, Mr. Mantle asked California Community Colleges system Chancellor Brice Harris what he could do to fix constant complaints that counselors give contradictory advice to students and slow their progress.  Mr. Harris replied, 

Well, you're bound to get concerns when you have a ratio of 2000  to 1 for counselors to students [sic].   

2000 to 1? (Mr. Mantle exclaimed)   

That's the average up and down the state. The Master Plan for Higher Education is still the most elegant public higher education system in the world. It's jut grossly underfunded.

Underfunding has been going on so long that it has terminated normal operations at the CCCs and CSU, who turned away hundreds of thousands of students, and compromised educational quality at UC.   

In addition, there is little sign that underfunding will end soon.  Leading lights like Jerry Brown and Barack Obama are first and second generation austerity Democrats, who call for next generation technologies, industries, and workforce skills on the basis of next to no new public investment.  

Given the intersection of public-sector poverty and imposed austerity, Mr. Mantle saw mass access being put at risk by the costs of the research segment, the University of California, which he described as elite. 

When the segment heads assured him that in fact per-student expenditures where not up but down, he asked, 

What about professors’ salaries though?  Because my sense is, at least for star faculty, maybe this doesn’t apply across the board – there’s been a kind of race to getting the top talent.  UC wants to get the very best and the brightest; as professors you’ve got to compete with private, as well as other really public institutions.  So, has the cost of faculty salaries not risen faster than the rate of inflation?  What used to be a very middle class job, hasn’t that become a very distinctly upper middle class job?

One possible response is that for younger faculty a UC assistant professorship is, in most fields, a lower-middle class job that entitles them to apartment rent and a long commune. But Mark Yudof did make some headway with averages: our faculty are 

a solid 10, 15 percent below our peers, both public and privates.  So I would say we have a very public-spirited faculty. If you teach at [UC],  . . . half your kids are poor. You are an agent of upward mobility.

Mr. Yudof continued on about the relatively low cost of UC's "60 Nobel laureates. I'd prefer they not leave our campuses."  Mr. Mantle, however, was worried about the costs of exactly this kind of elite quality. "It's a wonderful thing you've got them. But they cost money."

He made this more explicit later on. 

The University of Texas, your former system, President Yudof, has been ground zero in this battle between those who believe that maybe some of these elite public universities have become too elitist, and no longer affordable for states to fund them in this age of belt tightening.  So, is this question over whether we can still afford a University of Texas or a University of California with all of its overhead, with all of what goes on – is that a legitimate debate in your mind to have?  Or are things just great, these institutions need to be protected as is?

This is a profound, important social question that deserves two serious answers.

1. Research universities need to protected and upgraded.  Great ones deliver far more value to students and society than do average ones, especially in our absurdly competitive global innovation economy.  It would be a start to offer simple language about making California an "educational leader" once again.
2. Research loses money now, for the sake of big returns later.  Only the public sector will take the important risks on high-value, basic research.  Private firms can't justify it to their accountants or shareholders. The state has to cost share with the federal government.

This is not what the audience heard.  Instead of (1), Mr. Yudof said that public research universities don't need to be protected, that we're not "going to have a 14 to one student faculty ratio" any more, and waxed on at a couple of points about how we're going to keep having bigger classes and more distance learning.  

This kind of answer just begs the question, so if the research university keeps getting worse, why does it keep costing more?  More generally, why would the public want to pay for expensive OK quality?

Instead of (2), explaining the real economics of research, Mr. Yudof doubled down on the false assertion that extramural research is a big profit center for the University.  Responding to a question about more sources of income, one exchange went like this. 

Yudof: We can raise more money from the private sector.  We have indirect cost recovery.  But if you’re sitting there at Berkeley you’re getting 240 million dollars from the state of California, and the faculty is bringing in 800 million dollars of research, would you, Larry – I have a question – would you give up the 800 million?

Mantle: Well, no.  And if research is actually making money, or paying for itself, why aren’t you going out hiring more professors to do research, if it’s that lucrative?

Yudof: We actually are.  Every time somebody does a study, and says, “Boy, you’ve got so many administrators," it always turns out that they’re either in the hospitals, where they’re doing booming business, or the research enterprise.  

Mr. Yudof is citing gross research revenues.  Net research revenues are negative, and an NSF report last fall finally confirmed that average losses are around 20 cents on the income dollar, even after indirect cost recovery is factored in (the one bit of UC coverage is here).  

I'm writing this on Valentine's Day, and am sorry to report that Mark Yudof's answers broke my heart.  

Public research universities are losing the framing wars because they aren't explaining why their costly knowledge-creation is special, or that this special function always needs public funding support.  

As a result, someone listening to this summit could reasonably conclude that (1) the higher costs of research universities are blocking access to basic college education for veterans, working class students, immigrants, among many deserving others, and (2) that the great money-making scientific enterprise could easily be used to support UC students.  So, this line would conclude, move UC's state money over to the suffering CSU and CCC systems, and let science profits make UC self-supporting.

This is where public research universities have long been headed -- towards self-supporting status.  But it is a political dependent and financially diminished one, which ironically includes exactly the higher tuition and lowered access that the public fears.

It's going to take a huge collaborative effort to tell the truth to the public and to state government about the real costs and real uses of the public research university.  

by Stanton A. Glantz and Christopher Newfield  

While Gov. Jerry Brown's interest in online education captured the most headlines last month, the principles in his budget proposal for California higher education are more important.

The first principle is that correct public funding is essential to the combination of high quality and full access that made UC such a special exemplar of the potential of public higher ed.  The Governor’s budget says that “the state must begin to reinvest to improve the quality and affordability” of higher ed. 

This is completely right.  A central finding of our detailed study of UC’s budget, known as the "Futures Report"  (2006) was that public funding cannot be replaced by private funds in the form of gifts and research sponsorships.  More important, the Futures report concluded that the only way to replace public funding was with massive tuition hikes that were unacceptably large. 

The second principle Governor Brown (and many leaders in the Legislature) established is that the rapid tuition increases need to stop.   The Governor reiterated this point in his State of the State message when he said, “I will not let the students become the default financiers of our colleges and universities.”

The third and most important principle is to compare growth in higher ed budgets to the rate of state income growth, which the Governor’s budget proposal notes has “averaged slightly less than 4 percent per year.”  We have argued that this benchmark would both control costs and prevent destructive cuts to the state’s capacity to create new knowledge, capable citizens, and a creative workforce on the large scale required.

A problem arises with the Governor’s affirmation of this principle right now, in a deep funding trough created by massive cuts. Our chart shows where UC funding would have been if the state had followed Gov. Brown’s “income principle” for the past decade.

Past policy has been to privatize public university funding by deliberately shifting costs to students. So there is now a huge gap between "normal" general fund growth and UC's actual public funding level. The gap has been only partially filled by a tripling of tuition over this time period, but even these large tuition increases, once enrollment growth and financial aid are deducted, have covered 38 percent of the loss of state funding, according to University estimates.  

Governor Brown notes the resulting damage to both quality and affordability. He cannot, however, fix UC or CSU’s quality while simultaneously capping tuition and keeping state funding at their lowest per-student level in modern history--58 percent below its 2000-01 level (Display 7).

To be consistent, the Governor would need to tie UC funding to income growth not just right now, at a historic low, but over the long term. He would also need to propose a long-term plan to get public funding back on track—precisely so that tuition increases can be halted or, better yet, rolled back, even as quality is improved.

Finally, it has been suggested by University officials and many others that it is too late to fix the gap and that we should give up on fixing public funding.  

This view is factually incorrect. Glantz and Eric Hays have updated their report on how much it would cost to restore UC quality and affordability to 2000-01 levels.  Their answer includes not only the restoration of state funding whose decline is shown above, but also a tuition rollback to 2001 levels ($5278 in current dollars).  The recovery that the Governor's budget envisions, including not simply a tuition freeze but a tuition rollback for California’s entire higher education system (UC, CSU and the community colleges), would cost the median taxpayer $48 per year. 

We assume that the Governor is serious about ”reinvest[ing] to improve the quality and affordability of California’s system of higher education.”  We hope that he will maintain a logical consistency between his call to restrain tuition growth and the public funding recovery that this entails.  He – and all of us – need to study the graph above and move UC (and all of higher ed) back to the blue line, which stands for funding full educational quality for the next generation of students.

Antonello da Messina, St. Jerome in his Study (1460s).
The quantitative trader Nassim Nicholas Taleb became famous after the publication of his book The Black Swan, which analyzed  events that disrupt or shatter systems but that are unanticipated because they are so rare.  He became a major explainer of the 2008 crisis based on his long term study of nonlinear systems, uncertainty, and how things react to random events. One passage his new book, Antifragile: Things that Gain from Disorder, picks up there.

"After the crisis of the late 2000s, I went through an episode of hell owing to contact with the press.  I was suddenly deintellectualized, corrupted, extracted from my habitat, propelled into being a public commodity. I had not realized that it is hard for members of the media and the public to accept that the job of a scholar is to ignore insignificant current affairs, to write books, not emails, and not to give lectures dancing on a stage; that he has other things to do, like read in bed in the morning, write at a desk in front of a window, take long walks (slowly), drink espressos (mornings), chamomile tea (afternoons), Lebanese wine (evenings), and Muscat wines (after dinner), take more long walks (slowly), argue with friends and family members (but never in the morning), and read (again) in bed before sleeping, not keep rewriting one's book and ideas for the benefit of strangers and members of the local chapter of Networking International who haven't read it.

"Then I opted out of public life. When I managed to retake control of my schedule and my brain, recovered from the injuries deep into my soul, learned to use email filters and autodelete functions, and restarted my life, Lady Fortuna brought two ideas to me, making me feel stupid--for I realized I had had them inside me all along."

Mr. Taleb supports his scholar's life with his wealth.  He disdains universities, but the function of the university has always been both the enlightenment of humanity and the support of the conditions of autonomous thought.  The university does this for non-rich people.  His own experience confirms that detachment, tranquility, and concentration are means of moving beyond the existing and usually failing paradigm.  Moving from trading to analyzing and back again, Mr. Taleb rediscovers the necessity of Kantian reason, that which is free of the state's and society's determinations.

Plus, "free reason" extremely pleasant. Pleasure is something that the scholar has no right to ask herself to give up, or to abandon to the demands of others.

If you're an investor in educational services and are following MOOCmania in the newspapers or in the mind of the technopublicist Thomas Friedman, you may or may not buy their overblown educational claims, and you wouldn't see immediately how they are going to make money.  On the other hand, you might think, they can't be worse at making money than existing universities.

A quick tour of the horizon would show this investor major problems with the university's "traditional business model."

Policy paralysis: Public universities are never independent of state politicians, and none of the latter want to reverse huge, long term spending cuts even as it gradually dawns on them that the alleged cures for past cuts, namely tuition hikes, are worse than the disease.  Academic managers and politicians have jointly entered the phase that the prominent management guru Jim Collins calls "grasping for salvation."  Real budgetary and fiscal problems, you might assume while wearing your investor hat, will not be solved.

Flat revenue sources: Readers of reports by Moody's and other services will learn that all traditional revenues are under pressure, both on the private side, meaning especially tuition increases and endowment growth, and on the public side, particularly state appropriations and financial aid.  California's Jerry Brown is typical in insisting on continuing austerity.

Unconfronted major costs. You may or may not have followed senior manager plans to merge payroll systems or to securitize parking lot revenues, but you will note at least two major expenditures that senior managers have not addressed

• Administrative bloat. UC budget watchdog Charles Schwartz has just updated his previous study to show that administrative personnel have continued to outgrow academic staff during the crisis (chart above). He estimates the cost of "excess" administrative growth at about $1 billion per year. UC itself has classified 74 percent of its personnel, including medical center personnel, as non-instructional administration.
• Unreimbursed research costs.  UCOP's Office of Research estimated that in one recent year when UC had $3.5 Billion in gross revenues, it netted negative $720 million on this research.  The National Science Foundation, though it has long benefited from university subsidies of the costs it does not cover, confirmed the pattern that on average research universities put at least 20 cents of "institutional funds" into research funding for every extramural dollar they receive (page 16). You may remark, as an investor, that nothing meaningful is being done to address recommendations that research not be cut back, but fully funded.
• Politicized allocation of insructional resources.  Inside Higher Ed suddenly published a piece on UC "rebenching" today--with data apparently from the Delta Project showing, for example, UCLA students getting twice the per capita allocation as students at UCSC.  I've discussed the State Auditor's version of these findings, but even to an outsider they might suggest that instructional money follows the path of clout and prestige rather than of instructional need.  As an investor, you might wonder about the future of a central administration that lets a Santa Cruz student get half in instructional money of what she pays in tuition (actually less than that). You might conclude that on a per-dollar basis a MOOC could do quite a bit better.

The obvious advantage of online education is that it can replace administrative systems with temporary production staff,  conduct no research, and equalize teaching resources.  Online can freeride on research universities, at least as long as they last. But it can also dump the costs of "mission creep" that have created an overwhelmingly complicated system.

Online ed won't solve any of higher education's problems, either educational or budgetary. But in your investor role, it only takes a few minutes to see why you might bet on them instead of on public universities.

State political leaders are now using board meetings in the Cal State and University of California systems as political theaters.  Every couple of months they administer dramatic tonguelashings and stagey defenses of their constituents' interests.  I can't remember a time when the constitutional autonomy of UC has seemed so nonexistent.  Mark Yudof was hired in part because of his demonstrated success with state legislatures, so it is worth looking further into how things have gone so awry.

I usually focus on Jerry Brown, who has blended advocacy of the disruptive technologies of the 1970s--bullet trains, water tunnels, distance learning--with Hooveresque austerity.  But I got a new perspective from the statement of Assembly Speaker John Pérez that the UCLA FA Blog helpfully posted yesterday.

Here is my partial transcription of his comments, which are worth reading carefully for reasons I discuss in the annotations.

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

Pérez is accurately citing Department of Finance data (Figure HED-01). From the state's point of view, UC turned a massive public funding cut into a $500 million net gain for the university.

This doesn't square with UCOP's standing claim that tuition increases make up for only one-third of the state cuts (pp 3-4).  Absent a clear explanation from the Office of the President, the state will assume that UC has done extremely well in the crisis.  Pérez adds a bit later that "higher education and K through 12 education are virtually the only places where there were any restorations to the cuts in this year's budget"--painting UC and CSU as big winners in a still struggling economy.

It is worth recalling that this statement is further evidence for the argument that I and other Senate planning and budget types have been making to UCOP for a decade, which is that tuition increases cause public funding cuts, since they teach legislatures that public cuts have no negative consequences for universities.   Pérez is saying that Sacramento has also noticed this fatal reciprocity--and plans to stop it by freezing the tuition side, with a twist.

We need to really address the problem of the increases that our students have endured over the last several years. And that doesn't just impact our undergraduate students. There is a huge problem with respect to our graduate students, and our professional school students.  Not only are we losing so many to other great universities, but even those that chose to stay within the university system are then hamstrung by the amount of debt that they graduate with. It limits the choices that they make, and the options that they have to make their full imprint on this state. That is a very real problem that we all must address.

Mr. Pérez is quite right about the effects of grad and professional school debt.  Conventional UC wisdom, on the other hand, assumes that the legislature doesn't care about these students because it has no interest in research or graduate programs.  This appears not to have been the case.

A long line of UC administrators convinced themselves that financial aid would offset large fee hikes, and that high fees wouldn't interfere with UC's public mission. The most vocal architect and theorist of this policy was Berkeley Law Dean Christopher Edley, who argued that the era of public funding was over but that high tuition / high aid would allow UC to serve the public interest even better.* These arguments appear not to have persuaded the legislature, or at least the Assembly Speaker.  Now the University as a whole is being punished for the sins of the professional schools.

Mr. Pérez continues:

But we need to be very clear that we have an expectation in the legislature that you do no additional harm to access to the University as you treat all of your students, not just your undergraduates. And the decisions that we make here will impact the way that this budget, and successive budgets, are viewed by the legislature. 

Let me speak to one item in particular. This notion that the additional $125 million that the Governor and the Legislature were able to find in the waning days of last year's budget discussion as a buy-down for a proposed fee increase was essential to do in that moment.  It does not create a new model for you. Do not expect that you can propose a graduate or professional school fee increase and then come to us and find a buy-down.

This says in effect that the Democratic supermajority in the legislature will follow the Governor in neutralizing tuition increases.  They will not be bought out, so UC will take the tuition heat from students. And these increases may trigger either new cuts or non restoration of public funds to balance out any increased revenue from the tuition increases that Sacramento doesn't want.

Finally, the Speaker appeals to the self-interest of UC's decisionmakers. If you do propose fee increases, he says,

What you will find, is that we will come back to you and say, what are you doing about executive compensation? You will find a Speaker that is less receptive to your efforts to stop legislation that is aimed at limiting your ability to compensate your executives at the level that you have. Why? We have stood with you beecause we understand that you need to be competitive in attracting the best administrators, the best researchers, the best clinicians to have a world class institution. But we also need to have the best students. If we make decisions that undermine our ability to have those worldclass students, they will be met with a similar reaction by my colleagues in the legislature.  . . . We have to be very clear in how we move forward . . . nothing can be done in a way that undermines our commitment to a broad-based university community that is actually is continuing its committment to affordability and accessibility.

Everyone agrees with the Speaker's accessibility goals. But here the speaker is saying that access can no longer be pursued through the privatization of education's costs.

Assuming this sticks, then here's what we're looking at. No restored public funding.  No tuition increases.   The end of moderate stability via privatization. Checkmate.

We have to consider the possibility that UC is never going to regain its foundational combination of mass access and top quality.  I don't accept this. I assume I have plenty of company.  But the only way forward is to justify instructional and research costs in a way that (1) allows equitable and effective internal distribution, which we don't have; and (2) explains the need for funding recovery in a way that seems plausible to the public and the legislature.

(1) is a major job for the Senate.  (2) is everybody's job. It would include explaining the value of physical infrastructure, of face to face contact, of student services and administrative support, of course sequencing and intellectual immersion -- of all the things that go into the "student experience."

Senior managers can't or won't do this without faculty help. Our incentive is that if we don't do this, the current best case scenario is this year's budget flatlined into the future, year after year.

***

*Professional school tuition increases became a public issue in the fall of 2009 when a new wave of professional schools added or raised fees at the same time as undergrad fees were going up 32%.  But a change in professional school fee policy had begun four years before.  Previously, these fees were benchmarked to the fees charged for in-state students at comparable public universities (Attachment B, Bullet 4). There were other criteria and much wiggle room, which had allowed "big five" professional schools (law, business, medicine, dentistry, and veterinary medicine) to double fees during the cuts cycle 2002-05 from the $6k to the $13k range (Attachment 1 Display 5). The increases were around 30% for 2004-05. Display 6, which sets up comparisons between UC's 2005-06 fees and those of similar universities (and which includes campus fees in an average total that is higher than the figures in Display 5), shows the Big Five professional school categories in the $21,500 to $24,500 range.  For 2006-07, professional schools raised fees another 10% and clawed back money lost in a lawsuit to previous professional school students by charging that year's students a $1050 surcharge (page 2).  In January 2007, the Regents discussed a change in professional school policy that put competitive needs and market forces first, and allowed professional schools to keep additional fee increments rather than receiving a portion of their fees back from the campus.  They approved this policy in March 2007, over Senate concerns about using fee increases routinely to replace public funding cuts, though they did reject in principle differential fees across the system. In September 2007, the Regents approved three years of increases of 18-19 percent per year at the major professional schools.  Berkeley Law Dean Christopher Edley was the most eloquent, tireless proponent of the increases, arguing in public and private that quality, defined in large part as rankings, had been hammered by public funding cuts, and that very major tuition increases were the only solution. (A 2005 LAT op-ed is here; his discussion with the LAT's Richard Paddock of March 12, 2007 was also important, though no longer on line. My recounting to him of the history and effects of his interventions starts here).

Mark Yudof in 2008, before his arrival at the University of California

These materials will be expanded and edited on a rolling basis.

1992, May 13: Mark Yudof, "The Burgeoning Privatization of State Universities, CHE
2002, January 13: Mark Yudof, "Is the Public Research University Dead?" CHE
2004, March 12: Mark Yudof, "What if the Yankees Were Run Like a Public University?" CHE
2008, February 15: Mark Yudof, ""Are University Systems a Good Idea?" CHE
2009: Feburary 20: "UC and CSU: Cut Again" (Newfield)
2009, June 17: Mark Yudof on the UC budget and variations of furloughs
2009, June 30: Mark Yudof and Richard Blum to UC Faculty Associations on Budget Cuts (with reminder that faculty are not to address Regents directly)
2009, September 24: Mark Yudof in the New York Times: "being president of the University of California is like being manager of a cemetery  . . ."
2009, September 30: "Mark Yudof Says Yes-No to the Public Option" (Newfield)
2009, December 9: Time Magazine letters on selection of Mark Yudof as a Top-10 college president
2010, May 2: Mark Yudof to the Chronicle of Higher Education, explaining his repeated rhetorical question "who is going to pay the salary of the English department"? (Response to Robert Watson, "The Humanities Really Do Produce a Profit," CHE March 21, 2010).
2010, May 23: "Strange Defeat" (Meranze)
2010, June 6: "Same Flat Revenues, Same Flat Pitch: How to do Better" (Newfield)
2010, August 27: "Why Did Mark Yudof Discuss the Pension Report Ahead of Its Release?" (Newfield)
2011, January 11: Mark Yudof's BMOC Interview with Patt Morrison, Los Angeles Times(h/t Cloudminder)
2011, January 16: "Ending a Bad UC Week: What Points Might Help Turn Things Around?" (Newfield)
2011, May 24: "Whose University: On Yudof and 'Us'" (Reclaim UC)
2011, July 13, "Feeding the Cuts, Part 1" (Newfield)
2011, December 11: "There Are Alternatives to the Yudof Privatization Story" (Newfield)
2012, February 9: "Have We Protected Poor Students from Debt?" (Newfield)
2012, March 8: Mark Yudof to UC Community on campus climate, provoked by heckler at UC Davis's "Israeli Soldiers Speak Out"
2012, April 12: "That Was the Week that Was (UC Policing)" (Meranze)
2012, June 29: Mark Yudof on 2012-2013 Budget (declaration of victory for advocacy program)
2012, September 19: "Progress at the Regents' Retreat" (Newfield)
2012, November 12: "The UC Regents' Budget: The Trouble with the Prop 30 Norm" (Newfield)

This morning I found myself on KQED's Forum with Michael Krassny program to discuss online education with San Jose State President Mo Qayoumi, Udacity's Sebastian Thrun, and (unfortunately too briefly) Student Regent Jonathan Stein.   You can find the audio here.  Although a variety of topics came up let me point to just a few of the points that became clear over the course of the hour.

First, the discourse around education online remains hopelessly muddled.   As Bob Samuels just pointed out the official line coming from the Regents, the Governor, and the MOOC-makers is that higher education has been frozen in a glacier for decades only now being thawed in the brilliant sunlight of Coursera, Udacity, and EDx.  In this framing, faculty are cast as luddites opposed to the inevitable progress of humanity.  Ironically, the only person who dissented from this in any significant way was Chris Edley who, in trying to get his desire for a virtual campus back on the table, conceded that there have been ongoing experiments on all the campuses to include digital tools and to restructure specific courses when online or digital will enrich the course experience.  The Governor's framing of online depends on a serious misreading of history. 

But today's discussion revealed an even deeper level of confusion.  One of the interesting things about today's program was that it sought to combine two extremely different problem situations: a discussion of the recent contract between SJSU and Udacity to create experimental courses designed to help CSU and high school students who need remedial teaching to thrive in college and a discussion of the direction that UCOP and the Regents want to take in expanding online courses at UC.   But while the conversation did point to several points of agreement (the continuing importance of the residential experience for college; the importance of using online resources to provide things that are different from what goes on in face to face teaching; the concern to make certain that education was not debased in the pursuit of cost savings; worries about maintaining the teaching function) what is clear is that online education is being treated as a solution to a wide range of problems without actually asking if it was really the most appropriate solution or seriously considering what other solutions were possible.

Sebastian Thrun and President Qayoumi were quite clear that they were conducting an inquiry with outside evaluation to address a specific problem.  And it does seem to be a fascinating experiment.  But as one caller pointed out, rather than turning to private providers to provide remedial education shouldn't the state  engagie with K-12 teachers to ensure that students are provided the knowledge and tools they need.  And while this experiment has gained a great deal of publicity (and one assumes will enable Udacity to monetize its program) there seems to be an unquestioned assumption that if this specific experiment works it demonstrates the wider applicability of this sort of partnership throughout higher ed.  I was reminded of the old saying that if all you have is a hammer then everything looks like a nail.

This enthusiasm merges into a second point:  it has become even clearer over the past few days that technology is being seen as a replacement for actual political debate and social investment. Although Krassny seemed quite interested when I pointed out the actual funding history of Higher Ed in California and the Governor's efforts to naturalize political decisions that he and his immediate predecessors had made, none of the other guests engaged the question.  In this silence, I could hear echoes of yesterday's Regents meeting.

The mantra of innovation and online courses as a solution for the problems facing students (student debt, time to degree, decline in face to face teaching, issues of access) allows the political and educational establishment (and the online start-ups) to avoid the question of social priorities.   Insofar as online is not being designed to replace face to face instruction but to enrich it (in which case it is unlikely to provide cost savings) then it is being used to paper over a political decision to de-emphasize the training of mass creativity so and instead expand mass incarceration and increase inequality. 

But before Jerry presses everyone to love his iPhone or Regent Pattiz convinces us to think of courses as Mp3 downloads it is important to insist that online planning be linked far more carefully to specific aims and goals.  What specific tasks are online efforts trying to accomplish? Which specific problems do they aim to solve?  How will online courses factor into larger questions of academic programs for both undergraduate and graduate students?  And what alternatives are being pushed aside in the rush to online?   Faculty have shown that you can enrich education with properly thought through digital tools and the for-profits have cut educational costs (if not prices) if you are willing to sacrifice quality.  But here is the question:  where is the evidence that you can do both at once?   

I was only able to listen to a portion of the Regent's session on Online Education (I caught the last 45 minutes of the UCOP discussion and the presentation by the MOOC providers).  But even in that period two extremely important points were made although it is unclear that the Regents or UCOP really understood their importance.  But faculty must.

The first was made by Jonathan Stein (the "student" regent).  Stein pointed out quite forcefully that in his dealing with students he found no groundswell of support for online education--despite the shibboleth that since young people today are raised on technology they must prefer digital approaches.  As Stein stressed, most UC students are paying a great deal of money, expect and want a residential environment and the possibility of real rather than virtual contact with peers and professors.  Given the National Bureau of Economic Research's recent study on the importance of real versus virtual friends for one's happiness this is no great surprise for those who take the time to think about it.  But we might want to listen to digital natives like Stein; they may understand the limits of these platforms better than UCOE does.

The power of this point was brought home by the panic stricken responses of President Yudof and Regent Lansing that no one,  really no one, not a soul, was even contemplating moving all of UC online or requiring students to take courses online.  But we should press them on this point.  If UCOP and the Regents end up trying to use the expansion of online courses--rather than say the increase in the number of faculty--as a way to overcome so-called "bottleneck" courses, and if they use online courses as the primary means to allow community college students to meet their lower-division requirements then, as a practical matter, students will be compelled to take online courses even if they are not officially required.  Faculty need to take Stein's argument seriously: but in order to do so we need to re-articulate the ecology of the residential campus and the connections between different parts of students' experiences.  It is not seeking to block innovation to recognize that there is a fundamental value to many students (especially younger students) to the residential experience and the face to face interaction with teachers and peers.  

The second point--in some ways even more far-reaching--was made by Sebastian Thrun founder of Udacity.  As Thrun insisted, online courses will not offer educational advantages if they simply try to transfer the classroom experience into a digital form.  Putting faculty in front of cameras and simply recording their lectures will only dehumanize the process of learning and serve to debase the practice of teaching.  Online will be an advantage only when it can be put together to do exercises that cannot easily be done in a classroom (and not simply in the sense that you can get more people to see a lecture) and when those exercises can be combined with a renewed attention to person to person pedagogical contact.

To be sure, Thrun's comments were directed, at least in part, towards justifying why campuses needed to hand control over course construction to his course designers.   But that is not its only significance.  Instead its greater significance lies in the reality that if online offerings are going to be used to enrich the possibilities offered in California higher ed they must be designed in ways that enrich the goals of different academic programs by either offering a different set of challenges for students or else by supplementing the face-to-face teaching already being done (the purpose of the so-called flipped course).  The first question that needs to be asked of any online endeavor is what educational value does this enable me to do that I cannot do in a more traditional format.

I wish that there was evidence that the Regents understood this point.  But judging by the close there was none.  Regent Pattiz continues to think of online as if higher ed is the music business where you purchase a download of a discrete chunk of content rather than--as Thrun and others tried to convey--an ongoing process of directed learning.  Regent Reiss, not showing the sort of attentive learning one might wish, trotted out the tired cliche about the end of the "sage on a stage" not realizing that the implications of the presentations by EDx, Coursera, and Udacity was that the teacher as director (and not as "guide on the side") becomes even more important in these models.

If the capacity of digital tools is that it may enable more possibilities for learning through questions and problems it is worth remembering that that model goes back even further than the much abused modern lecture in a classroom and that it was tied to a sage.  Because what Thrun was talking about was the reinvention of Socratic dialogue and not the download of an mp3 file.  It has been the austerity policies of the last twelve years--not the invention of new technologies or the alleged conservatism of the faculty--that has driven the dialogue and the seminar to the margins of the university.  If we are serious about the quality of education then returning the dialogue and the seminar to the center is the task facing education going forward--whether digital or not,

California continues to show public universities the way towards a permanent austerity.  Governor Jerry Brown's budget proposal for 2013-14 (summary for higher education), released January 10, is a case in point. It raises once again the question about how to respond, which I'll discuss below.

A quick review: The budget provides $125 million in additional funds (the other $125M of a reported $250M was a Prop 30 tuition buyout for last year), and will still leave UC 19% below its 2007-08 state funding level in dollars unadjusted for inflation, enrollment increases, or new expenses for benefits etc. (Department of Finance figures p. 35).  After two additional years of the proposed 4 percent general fund increase, UC's general fund will be around $2.86B, still below 2010-11, the last year before Gov. Brown took office and cut UC and CSU $750M each.  In practice, less than that will flow to UC campus operations: see my discussion of the Regents' November budget for an explanation).

At that November Regents meeting, UC Executive Vice President for Business Operations Nathan Bostrom summarized the problem, with Jerry Brown in attendance.

Click here for a full rush transcript of the event called "Rebooting California Higher Education last week.  Many thanks to Jenna Joo of UCSB's School of Education for the enormous amount of work that went into its preparation.
The transcript was prepared for the Online Study Group,  funded by UC's systemwide Humanities Research Institute (UCHRI) to conduct a study called  "Disruption or Decline?: The Impacts of Online Higher Education on Minority-Majority California."

Analyses of the event include that of Bob Samuels, a participant from UC ("A Failure of Interaction,"), Jeff Selingo, editor-at-large at the Chronicle of Higher Education ("Finally a Path Toward Solutions to the Crisis in Higher Ed,", Audrey Watters at Hack Education (and her storyfied tweets).  I'll add later to the list of coverage.

University Librarian, UC Santa Cruz, 1966. Photo by Ansel Adams.

By Ann Bermingham (UCSB) and Catherine Cole (UCB)

For the first time in nearly twenty years, an all-UC faculty discussion took place on the future of the public university system in California. Defying present discourses of short-term gain, crises, and austerity, participants from all ten campuses in the University of California system who met at UC Santa Barbara last February were asked to take a long view and to design the kind of University that they believe will meet the challenges of the 21st century.

The meeting’s basic premise, that “education is a public good, not a private benefit” and that it should be “treated as a resource, not a commodity,” may not seem radical, but  it is. Recent years have seen a breathtaking public divestment in higher education that has been accompanied by a widespread rhetorical shift—often arising from university governance boards dominated by the corporate sector—that reframes education as a private benefit and personal investment. The Santa Barbara meeting was an attempt to counter this discourse by reengaging faculty in planning for one of the state’s greatest public resource—the UC.

Photo from "UC Online Courses Fail to Lure Outsiders," San Francicso Chronicle.

UCLA's "Reboot" with MOOCs extravaganza begins right about now.  Here are a few questions I'd like to see answered.

1. Whether for-profit or not (e.g. Coursera vs. Udacity), offering free online courses generates no revenue.  10*0 = 500*0 = 2,700,000*0 = 0.  There's great politics here but not a business model.  What are your core revenue sources?

2. A recent piece in the New York Times suggests that Coursera's main revenues now come from click-through sales of college products and selling information about test results to potential employers. Is this correct?

3. Assuming (1) and (2) don't financially support the massive, open teaching operation you envision--or won't attract investors looking for multiples on their capital--is your main revenue plan to provide online courses to existing universities for their enrolled students?

Photo: Granada parking lot, Santa Barbara, CA.

By 6 am this Sunday morning a neon sign was blinking silently inside my head. It flashed MOOC, MOOC, MOOC, MOOC.  The house was dark and the sun nowhere to be seen, but I got up to see who left the sign on.

Most people now associate MOOCs with Udacity, Coursera, edX, and the other newborns of the Year of the MOOC.  Given where I work, I associate them with the proposal for the "cybercampus," or "11th campus" of the University of California, first floated during the Furlough Summer of 2009.  Two weeks before the watershed Regents meeting on the furlough vote and the new president's emergency powers, Berkeley Law School Dean Christopher Edley wrote an editorial in the Los Angeles Times that presented online education as a way of using technology to make up for budget cuts.  The false implication was that we could get around Arnold Schwarzenegger's abrogation of the Compact and his 20% cuts to state funding by replacing a lot of teachers with technology.  This is the core of the MOOC vision that created UC Online Education out of the Commission on the Future process, which sputtered along and how now been decisively bypassed by the three big entrants mentioned above and other smaller ones--bypassed for market share, that is, in the market for individual college-level courses, which is in fact not the university's market.

Elsewhere in his July 2009 article, Dean Edley stated the core problem perfectly:

Five years ago, when I became dean of the UC Berkeley School of Law, I worried that California leaders were no longer committed to having a world-class university, especially law schools. Nowhere is it decreed that a state must challenge the best private universities, though California was proudly unique in that regard. But a generation of stingy state investment suggests that the goal of "world-class K-16 education for all" has become, simply, "better than Mississippi."

True. But creating a UC cybercampus, say a UCOL, is not the alternative to California higher ed's reversion to the norm.  It is that reversion to the norm. It is a reversion to mediocrity--or so we must assume without actual evidence that online is educationally equivalent to intensive learning.

Fast forward to November 2012, after a year of another 25% cut to UC's general fund revenues and a non-cut year thanks to the successful resolution of the hostage crisis known as Proposition 30.   Gov Jerry Brown went to a Regents meeting that month to revive this 2009 solution to an educational crisis that he will neither define correctly nor fix honestly.  Which brings me back to my title and the question, why won't he?