The Problem; and Who Might Solve It

Presentation by Charles Schwartz, Professor Emeritus of Physics at UC Berkeley
National Conference for Student Regents and Trustees, held at UCLA, April 4, 2009
posted at    http://ocf.berkeley.edu/~schwrtz

     Public Higher Education is in deep trouble throughout this country.  The simple name for what is going on is PRIVATIZATION.  That means that more and more of the cost for the core academic budget is being shifted from state funds to student fees, mostly being put upon undergraduate students and their families.

     The leaders of these public universities and colleges bemoan this situation; but their only solution is to ask, beg, and pray for increased state funding. Few of them have any real expectation of success; and so your fees will continue to rise rapidly.

     I want to outline some alternative remedies that can be advanced if you, students and student leaders, get yourselves educated about what is really going on in the financial world of university operations, and then get yourselves organized to demand some necessary changes.  My analysis is focused primarily  on the major research universities, like UC, but may also have some relevance to other comprehensive institutions, like CSU.

     At a recent meeting of the UC Board of Regents I heard a report from the Vice President for Budget, in which he mentioned that student fee revenue at UC covers 30% of the Cost of Education.  Shortly afterwards, I heard the president of the UC Student Association echo that same statistic: student fees pay for 30% of the Cost of Education.

     That statement about the Average Cost of Education is regularly found in the official budget which the Board of Regents sends on to the state capitol; and so you can understand the way that the Governor and the State Legislators respond in times when their overall budget picture is very tight: Well, those university students are still getting quite a free ride at the taxpayers' expense, so it is the lesser of many evils to let student fees go up some more.

     What I want to tell you is that the way they calculate "The Average Cost of Education" is a big fraud. This is a very old and very bad habit of accounting that is used not just by the University of California but by all our universities.  The cost numbers that they use cover the total cost of everything that the professors do throughout the academic year, plus their support staff in the academic departments, plus other supporting and overhead costs of the institution.  If you want to know what is the true cost of Undergraduate Instruction, then you need to separate out the portion that goes for faculty research work and the portion that goes for graduate programs. Those other missions of the university - faculty research and related graduate programs - are very important public services performed by the university, but it is wrong to hide the cost of those missions under the cloak of undergraduate education. It is especially wrong to dump the cost of those missions onto undergraduate students and their families.

     I have carried out a detailed study of this question, using a variety of data sources that come from the university itself. This disaggregates the bundle of costs described above using a Faculty Time-Use Study conducted some years ago.  My result, for the year 2006-07, is that the average cost (that is, cost to the university) for undergraduate education was about $7,000 per student.  That strongly contradicts the official report that the Average Cost of Education was $17,000 per student. And it means that undergraduate student fees are now at the level of 100% of this cost, not 30%, as they have claimed.

     This result of mine is very controversial. You can read more about it on my web site. Under "Anthropology 139 Lecture"is a recent talk I gave on this subject to an undergraduate class at Berkeley. (http://ocf.berkeley.edu/~schwrtz/Anthro139.pdf ) Under the TOPIC: "Cost Accounting at a Research University" you can find links to several other papers that go into various details of this analysis. There is also a 1-page handout I prepared for this conference, titled "A Short Course on University Accounting", which includes some numbers illustrating the ways in which official numbers about University expenditures for "Instruction" can be very misleading.

     You don't have to accept my numerical results. But you should understand that the establishment way of calculating "The Average Cost of Education" is both dishonest and destructive when you are looking at a research university. And the assignment I give to you, as students and student leaders, is to take this question, directly and persistently, to the top officials of your own campus: What is your actual cost, averaged per student, for providing undergraduate education, as separate from other missions of the university? Just asking this question of your campus officials will launch you on a fascinating journey:  I am familiar with the many forms of avoidance and misdirection that they may use in response, because the truth of this matter, at any of our leading research universities, is something that most faculty, as well as administrators, are afraid of.

     This can be a potent challenge to the current wave of privatization.  It speaks not only to the question of, Whose dollars are going where?, but it also raises the question of credibility: Who is to be trusted in speaking publicly about university finances?

     I can suggest a second line of approach to the problem of escalating student fees, which does not depend on my controversial cost analysis. In the good old days, when state funds paid for the entire core budget of our public colleges and universities, then it was just that the majority of seats on those Boards of Regents and Boards of Trustees were given to elected public officials or to individuals appointed by elected public officials. But now that a large portion of the core budget has been shifted from state funds to student fees and tuition, isn't it proper to demand that a proportional number of seats should be reallocated to Regents or Trustees who are chosen by those students (and their parents) who are paying the bills?  I estimate that, given the current financial balance between state revenues and student fee revenue at UC, there ought to be 8 students in voting seats on that Board, not just one.  The same arithmetic seems to hold up for the CSU system; and I imagine something similar would apply across the country.

     You may think this is a wild idea, radical and unrealistic.  But it follows the old American philosophy of No Taxation without Representation.

     A third topic I have looked into is the growth of administrative bureaucracies at the university.  Here is a graph showing how management personnel, throughout UC and also at the Berkeley campus, have multiplied way out of proportion to total employee numbers over the past fifteen years. I have asked top officials to look into this data and give some justifications; but they have failed to do this. My estimate is that this apparent bloat wastes something like $600 million a year in university funds.

     To make any real progress in reforming the financial mess facing public higher education will require not just new ideas but also new political organizations. There ought to be some new group, made up of undergraduate college students and their tuition paying parents, who want to see their interests represented in some collective fashion as consumers facing the industry called higher ed.  Can you imagine such a thing?