by Charles Schwartz, Professor Emeritus, University of California, Berkeley                                  April 15, 2007

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Recent backroom maneuvers by the Regents leave a strong hint that they are working toward privatization, a new model of financing for the University of California that is aimed to preserve the Quality of this great Public institution by turning it into a copy of the leading Private research universities. Someone will have to pay for this grandiose plan - and undergraduate students are the principal target. That will mean abandoning the Master Plan, with tuition increases that betray the two basic principles of Access and Affordability for undergraduate education.

The Ins and Outs of Long Range Planning

     Typically, long range planning (or planning of any sort) at a major university is carried out behind closed doors by select leaders of the administration and the faculty.  After those people have explored their options and sorted out their preferences, they may discuss their plans in private meetings with select members of the board of regents or trustees; and only when all is preordained will there be formal public disclosure, discussion and ratification of those plans.

     The University of California has good reason to engage in serious long range planning.  Two severe state budget crises – in the early 1990s and early 2000s – have been hard on this University, and harder still on undergraduate students and their families who have been required to make up the fiscal shortfall with increasing fees.  There are many experts who predict that things will get worse in the years ahead, due to a “structural deficit” in state budgets; and these problems are not unique to California but challenge public higher education throughout the nation.

     So let us watch how the leaders of UC go about dealing with these problems.

     Two years ago, UC’s President Bob Dynes announced the formation of a “UC Long Range Guidance Team”, composed of select regents and administrators.  They have met in secret 8 times;  and we are still waiting for the public release of that body’s report, which has been held in abeyance for most of a year. [Based upon the little bits of information available about that group’s work, I would guess that they will not have much of substance to say.]

     Two recent developments lead us to refocus attention on this topic: they face in opposite directions – one open and one closed - and we are left to wonder which one is for real.

A.    At their January meeting, The Board of Regents of the University of California approved the formation of a new Standing Committee on Long Range Planning. (See agenda item MM-3 at the 1/18/07 meeting of the Board.)  That means that this topic will now have to be addressed fully in the public view.  

B.    Last October, the Chairman of the Board, Regent Gerald Parsky, appointed a special new Task Force to Evaluate University Funding Options, charged to consider and report back on the following issues.

• UC’s forecast of tax revenues to the state of California for the coming years, its forecast of revenue to the University over the same term, and its forecast of expenses by campus;
• UC’s options in the event that the legislature is unable to sustain its present funding levels to the University; and
• UC’s ability to recruit and retain talented faculty, staff, and administrators.

This Task Force is composed of six current members of the Board of Regents, two former Regents, seven top administrators and two faculty leaders. It is assumed that the deliberations of this Task Force will be closed to public observers. [I am aware of no public announcement at the creation of this Task Force; this information was originally obtained by a formal request to the UC Office of the President.]

     The opening paragraphs of Parsky’s  (10/20/06) letter to the regents give some insight into their thinking:

For some time now, a number of Regents have expressed concern about the stability and predictability of funding for the University.  Historically, the University has been more likely to receive full funding when state revenues are relatively high – and less funding when state revenues are lower.  Unfortunately, several times during the past few years, an unanticipated decline in state funding caused the Regents to approve significant fee increases with little notice to our students and their parents.

Any sudden and unplanned decrease in state funding from its current level could have severe consequences for the University.  Accordingly, I have appointed a working group to consider and report to the Regents on the following issues: [See above •'s.]

     Based upon this information, I am led to the following musings. The possibility of privatization of the University of California has been hanging in the air for a while. There are various forms this might take. Continued escalation of undergraduate fees (tuition) is the most obvious path.  (We see a mention of fee increases in the first paragraph quoted above.) Preferential funding of some campuses or some programs over others is another path. (We see mention of “expenses by campus” in the first issue listed earlier.)  Of course, everyone gives lip service to the historical missions of the public university – it is just that we must prepare alternatives when the state does not provide all the money we say we need: “It is not our fault.”

     The most important clue regarding what the regents have in mind with this new Task Force is to notice what is missing from Parsky’s letter. The third bullet point, defining the mission of this group, identifies the priority of “UC’s ability to recruit and retain talented faculty, staff and administrators.”  This goal is usually summarized by the single word, “Quality.” However, in earlier enunciations of the Universities’ top priorities one has always seen the triumvirate, “Quality, Access and Affordability”, which may also be implied by referring to upholding “The Master Plan.”  What we notice in Parsky’s letter is the prime focus on Quality without any mention at all of Access or Affordability, the two other legs of the Master Plan.  

     This suggests, to me, that these regents have already decided that they are taking the road to privatization for the University of California: they will raise undergraduate tuition as much as necessary to provide the revenue needed to maintain “Quality”, however much or however little money the state may provide. They will dedicate UC to “compete” with the best private research universities by becoming like them, with undergraduate tuition going up and up in order to pay for that. If that should have consequences regarding which sets of students get to attend UC and which are unable to afford this luxury, that is unfortunate, but it will be defined as someone else’s fault.

     Among the members appointed by Parsky to this Task Force I can identify a few people with publicly stated positions on these fundamental issues. Regent John Moores, who is chair of the new Task Force, has expressed the view that state funding is on the way to zero and we should face up to that. [See his earlier remarks quoted in Appendix A of this paper.]  Former Regent John Davies was very clear in shaping the Board’s 2003 policy on funding priorities, stating that preservation of UC’s “Quality” should take preference over preserving student “Access” and “Affordability”. [See Appendix B of this paper.] Dean Chris Edley, of Berkeley’s Law School, has forcefully argued in favor of raising his students’ fees almost to their level at the leading private universities. [See item 303 on the agenda of the January 17, 2007, meeting of the regents’ Committee on Educational Policy]

Open or Secret Proceedings?

     At the March meeting of the Regents the agenda listed a report on this new Task Force to Evaluate University Funding Options.  [See Appendix C for a transcript.] The main speaker was Regent Russell Gould, who is the key member of the Board on these issues as Chair of the Committees on Finance and Long Range Planning.

     In discussing the purpose, structure and workings of this new Task Force, Regent Gould said,  “We intend this to be a very open process in assessing what the implications are.”   That prompted me to send a formal inquiry to UC headquarters. I asked for the following information about this new regents’ Task Force:

a) schedule of all past and future meetings;
b) attendance list of people at each such meeting;
c) agenda for each such meeting;
d) copies of documents/presentations given to attendees at each such meeting;
e) minutes, summaries, or any other records of the discussion at each such meeting.

In addition, can you find out for me whether any of those meetings may be open to public observation?

     The first response (received 4/4/07) informed me that:
"To answer your question, the Task Force is not currently open to public observation."
That official acknowledgment takes quite a bite out of Regent Gould’s credibility.

     A second response (received 4/12/07) provided some documents, admitted that "the Task Force had one full meeting of the membership on 5 February 2007," but claimed that "no schedules, attendance lists, or agendas exist" concerning meetings of that group. I find that awfully hard to believe. [Note.  If a critical number of regents attended that meeting, it was illegal.  That is why I ask for the attendance list.  They know that too.]

Some Basic Questions

     Those who advocate the privatization of UC will say that there is no alternative that can preserve the excellence of this institution.  But, I argue, they are simply unwilling to consider other paths, paths that might upset some long-standing and comfortable arrangements.

     Let me briefly outline some questions that ought to be basic to any long range planning at the University – but they are ones that the establishment leaders would probably not raise without some prodding.

Q#1. Where does the money now come from and where is it spent?

     In certain areas, one can see clear separations in the budget.  The Health Sciences (Medical Schools, etc.) are separately budgeted and this makes good sense because of the very different financial and educational conditions of that sector.  Some other professional schools (Business, Law) are now being treated in a separate manner, with much higher student fees leading toward greater financial independence.  When the faculty made a big pitch for more funding directed to the graduate academic programs that was adopted as a top priority and implemented.

     Elsewhere, however, there is much confusion about where the money goes. The question, “What is the actual expenditure for  undergraduate education?” is the sharpest example. The usual official statement is that undergraduate fees at UC amount to only about 30% of this cost; my own analysis leads to the conclusion that the true answer is now about 100%. (This discrepancy is not unique to UC but applies to other research universities, both public and private.)  This is no mere academic debate, since undergraduate fees (tuition) are such a major source of revenue and such a major subject of public concerns. Some clarity here is required.

Q#2. What can be done to control costs at the University?

     This is a question often asked but rarely engaged seriously by either administrators or faculty, since they perceive that they have valuable turf to defend.

     In subsequent papers, I hope to explore these questions in some detail, based upon my own experience in studying UC finances over the past decade-and-a-half.

     In the meantime, concerned readers might want to find some way to protest the “backroom politics” that is clearly implied in the creation of this new Task Force of the Regents and its secret proceedings.

Appendix A.

     The following is transcribed from the Secretary’s  tape recording of the January 19, 2005, meeting of the regents’ Committee on Educational Policy,

Regent John Moores:  ... Have we received any data as Board members about the point that Jodi [Anderson] raised, which was the percentage, excluding the hospitals, percentage of the university’s bills that are paid for by the State of California; and have we made any projections about where that number is going to.  I suspect, and this should come as no surprise, that number is drifting down
Provost Marci Greenwood:  Yes
Moores:  And what is it becoming asymptotic to? Is it asymptotic to zero?
President Robert Dynes: Zero
Moores:  Or are we actually going to have to send money back to the State of California?
Dynes:  It is almost linear, Regent Moores, and it goes asymptotically to zero.
Moores:  I suspect at some point it will. And it strikes me that is the elephant in the room that we ought to be talking about.  I’d like to see data on that and I’d like to have your thoughts, which I value, about, you know, where that thing is going to be in another five or ten years because it ought to be of enormous interest to everybody that cares about the University.
Secondly, the other enormous issue, I think is the perception in the minds of many thoughtful people, a number in this room, are that the University of California is declining in national rankings when it is compared to privates.  Now, that should come as no surprise, I am sure, to you or to President Dynes; but it is something that ought to be talked about, I think, in this room.  And this is a good forum for it.  It is happening as we speak. It is not; there is not a major event daily. But over time we are sliding away.  Like Regent Preuss, I am terribly concerned, and I think we are going to talk about it in a second, about graduate education, which is, I think, our soft underbelly.  But if we continue to ignore the fact that the privates, some believe, are pulling away, this is not going to be a very happy place in another ten or twenty years.

Appendix B.

     At the November 19, 2003, meeting of the regents’ Committee on Finance they debated and then adopted a set of budget priorities as follows.

The President recommended that the following principles be adopted for working with the Governor and the Legislature in developing the 2004-05 University of California State-funded budget:
A. Maintain and Enhance the Quality of the University – Quality is the most important asset the University of California offers the state.
B. Maintain Access and Honor the Master Plan – The state needs the highly skilled, well-educated graduates who are produced by the University of California.
C. Maintain Affordability – Ensure that the cost of attendance is reasonable and is not a financial barrier for needy students.

     Just before they voted on this, Regent John Davies made it clear to his colleagues that these three principles were not all equal in importance; some might have to be sacrificed.  Here is what is recorded in the official Minutes:

Regent Davies expressed satisfaction with the principles are presented. He commented that it was necessary at this time only to equip Vice President Hershman with some guidance so as to enable him to negotiate with the State immediately. There is no time to fine tune the recommendation. He believed that the recommendation provided sufficiently explicit guidance for Mr. Hershman to make it clear that the University intends to maintain quality no matter what and that if every other consideration must be re-prioritized because the State refuses to provide adequate funding, the Regents are prepared to do that. He recalled that the partnership and the compact were based on the assumption that sufficient resources would be available for the State to perform its part of the bargain. If the resources are not there, they cannot be created simply by agreement. He believed that those agreements provided predictability in good times but that it was implied that in bad times negotiations would have to be reopened. Although he regretted that students felt that sufficient input from them had not been sought, he emphasized that the Regents were up against a deadline and should approve the recommendation as submitted.

Appendix C.

     At the March 14, 2007, meeting of the UC Regents’ Committee on Finance there was an “Update on Task Force on University Funding Options”, given  by Regent Russell Gould - who is Chair of the Committee on Finance, Vice-Chair of the Board of Regents, a member of this Task Force, and Chair of the regents’ new Committee on Long Range Planning - and also by Regent John Moores, who  is Chair of this Task Force and a member of the new Committee on Long Range Planning.

Gould: "As you recall, Regent Moores launched this effort and Chairman Parsky assigned a group to go look at this. And it’s really to fundamentally look at the long term financial demands of this system, taking all the issues into account: it’s faculty and staff salaries, it’s the benefit structure, it’s both health benefits, it’s retirement; it is capital costs; it is the number of students enrolled.  It is the whole range of things that we know are looming large costs necessary for us to maintain excellence in the system. Coupled with that, we will be going through a determination of, given that number and given some scenarios of support that we can expect from the state, what is our funding gap?  What is a realistic funding gap? Present that to the decision makers and the Legislature and the Governor so that we can have an honest dialogue about what it takes to maintain this institution.  And then explore creative options that might provide us ways to bridge it ourselves. Because my hunch is we are going to have to look at more than just looking at Sacramento for our solutions.  We are going to have to look inside and we are going to have to look creatively at our own operations.  Now, to do that we have a Task Force which is broad based; it has people from both regents, faculty, former regents, staff.  We intend this to be a very open process in assessing what the implications are.  We also have a working group that is really looking at, developing the financial model.  That’s led by Steve Olsen, who is a Senior Vice Chancellor at UCLA and a former Deputy Director of the Department of Finance, who understands this kind of modeling.  We have added to it a former Director of Finance, a former Deputy State Treasurer, as well as faculty, staff, that we believe will be helpful in assessing what, you know, this basis is financially.  I am very encouraged that this can be fruitful work.  It has to look long term and it has to be an honest and credible reflection of what those costs are.  So, thank you for that question; and that is the plan.  John, Did you want to comment?"

Moores: "Just to say that I am, I think most of the members of the Task Force are wildly sympathetic to some of the students’ concerns about unanticipated fee hikes.  And this University has obviously surprised students a number of times over the last four or five years. It’s very disappointing when we have to do that.  I don’t think anybody here wants to raise fees and, at the same time, I think it’s the general sense is that this is the greatest public university in the world. And if anything, we probably need a good bit more financial assistance from the state, and not less; and we need some predictability of these things. Great."

Gould:  "Any questions on that item?  Very good, we’ll move along then."