University of California
Office of the President
Vice President for Budget
December 21, 2004

Dear Professor Schwartz:

Your letter to President Dynes of December 8, 2004 was forwarded to me for response. That letter, like your earlier letter to me, asked about the methodology for computing the cost of education. Our calculation of the average cost of education is based upon a methodology developed many years ago in conjunction with the California Post-Secondary Education Commission (CPEC).

The denominator is the total number of General Campus FTE students. The numerator includes direct expenditures for Instruction and the General Campus share of Instruction-related expenditures, such as Student Services, Libraries, Organized Activities, Institutional Support, and Operation & Maintenance of the Physical Plant. Public Service, Research and Financial Aid expenditures are excluded, along with the Public Service and Research-related indirect costs of Libraries, Organized Activities, Institutional Support, and Operation & Maintenance of the Physical Plant.

As we indicated on page 81 of the Regents’ Budget, the cost to educate a General Campus student using this methodology is $15,810. The student share net of financial aid is $4,750. Hence, our statement that General Campus students now pay 30% of the cost of education.

The University does not attempt to calculate the costs for various student majors or to differentiate the costs of educating undergraduate and graduate students. Because faculty teach at all levels and students from various majors take the same course any attempt to make such a calculation would require many assumptions. Estimates would vary widely depending upon which assumptions were used.

In short, I have been through the complexities of commingled effort and joint products many times with various agencies and individuals in Sacramento. Based upon that experience I have concluded that any attempt to disaggregate the cost of education will be based upon questionable assumptions and that any resultant numbers will be of little value.

While there is less variability in estimates that combine programs and levels of student, it is clear that even the aggregated calculation depends upon the assumptions used. I note, for example, a recent report from the Legislative Analyst’s Office (Cal Facts: California’s Economy and Budget in Perspective page 50) states that UC students pay one-fourth of the cost of education, which they estimate to be approximately $30,000. Elsewhere in that same document (page 33) they report two other estimates ($13,429 and $26,564).


Larry Hershman
Vice President for Budget

cc: President Dynes