LOOKING INTO THE UC BUDGET  --  Report #22     (email version)

by Charles Schwartz, Department of Physics, University of California
Berkeley, CA 94720.        510-642-4427          January 8, 1998


 I. Update on excesses in UC spending for top level administration. 

II. Update on some issues of Regents' misconduct.

                        A FAREWELL NOTE

This should be the last issue in this series of Reports.  After five 
years of working on this project, learning about the University's 
finances and finding many challenging questions to raise,  I think 
it is time to quit.  There are still many mysteries, such as: How is
the annual budget actually made?  However, my style of research 
relies on public documents and data along with an occasional quote 
from public meetings of the Regents, while the inner politics of the 
University remain hidden from public view.

Many people have let me know that they appreciate these Reports and 
I consider this to have been a worthwhile undertaking in terms of 
research and education.  As far as having an impact upon the 
University's top officials,  I certainly have not accomplished much.
The Regents and the administrators they hire seem to be as 
impervious to outside criticism as any self-perpetuating oligarchy.

Much of the data and analysis in this series of Reports should 
remain useful for some time and I hope that it may serve as a 
resource for others, perhaps active on individual campuses, who can 
engage more effectively in the debates that will shape the future of 
public higher education.  (An article by William Honan in The New 
York Times "Education Life" 1/4/98 describes a movement burgeoning 
across the country against the excessive costs of a university 
education, in which faculty are seen as the culprits.)

Back issues of these Reports are available most readily via email from:


     As published in the latest UC Annual Financial Report, Total 
Expenditures for Institutional Support (top level administration 
throughout the University) amounted to $442,233,000 in the fiscal 
year 1996-97,  a 7% drop from the previous year's figure of 
$473,602,000.  This decrease is only a mirage, however, produced by
recent fluctuations in the accounting procedures used for the 
University's insurance program.

     In Table 1, below,  I have listed the total annual expenditures
for Institutional Support, with the Insurance Items taken out and 
listed separately, using data from UC Campus Financial Schedules 
over the last 10 fiscal years. These two Insurance Items are listed 
in Schedules 10-B and 10-C, covering Systemwide Programs and 
Administration (SP&A), as "Liability Insurance" and "Insurance 
Expense Accrual" under the Institutional Support (IS) category of
Current Funds Expenditures.  With this adjustment, we see that the
figures for All Other IS Expenditures, in Table 1, show year-to-year
changes that are much more stable, i.e., free of sharp fluctuations,
in recent years.

     The data in the 4th column of Table 1, showing Year-to-Year 
Changes in Total Expenditures for Institutional Support, Less 
Insurance Items, show the effects of UC's severe budget problems 
during the years 1991-94.  The change in IS spending over those 
three years (0, -12, +4) amounts to a net decrease of $8 Million or
about a 2% cut in the annual expenditure.  During the three most 
recent years, 1994-97, increases in state appropriations have 
allowed for budget increases of 3-4% per year for the University
overall; and we see from the data in Table 1 that Institutional 
Support has increased by rather larger amounts: 6-7% per year.  Also
shown in Table 1 are figures for additional expenditures under IS 
which are paid for by Transfers, or Recharges to other budget 
categories within the University.

Table 1.  Institutional Support - UC Total Expenditures 
               (Less Insurance Items)     ($ Millions)

Fiscal    Insurance   All Other IS   Yr-to-Yr    Transfers  Yr-to-Yr
 Year       Items     Expenditures    Change    (Recharges)  Change

1987-88      7.2         300.0                    324.3
1988-89      7.2         337.3        +37         347.9       +24
1989-90      6.7         363.0        +26         388.5       +41
1990-91      9.1         384.8        +22         399.2       +11
1991-92      9.3         385.0        + 0         416.5       +17
1992-93     12.0         372.7        -12         424.9       + 8
1993-94     11.0         376.7        + 4         429.2       + 4
1994-95      9.6         397.7        +21         433.0       + 4
1995-96     47.3         426.3        +29         435.4       + 2
1996-97    (12.7)        454.9        +29         448.2       +13

Source: UC Campus Financial Schedules, Schedules 10-C and 11-E 

     Controversy has surrounded the question of how UC's 
administrative budgets shared in the pain of budget cuts during 
those difficult years in the early 1990s.  The repeated claim made 
by the UC President and his staff was that academic programs would 
be protected most of all and that administrative budgets would 
receive disproportionately larger cuts. In an official report to the
Regents in February 1994, each of the campuses stated that 
administrative services were being cut most severely: an average of 
27% below their 1990-91 levels of spending.  In subsequent 
statements,  UC officials have insisted that those cuts were real 
and were permanent.

     When I first started complaining that those claimed cuts in 
administrative spending could not be found in early accounting 
documents (see my Reports #7 and #15 in 1993,1995) the response was
that it takes time for the cuts to be phased in and one should wait 
for later data.  My Report #19, one year ago, pointed out that the 
promised cuts had still not materialized and, on the contrary, 
administrative spending seemed to be increasing at an inordinate 
rate.  In response, President Richard Atkinson designated Vice 
President Larry Hershman, UC's Director of the Budget, to meet with 
me and explain the discrepancies I had complained about.

     Report #19a (1/28/97) detailed what transpired at that meeting 
and presented further data which showed the falsity of the official 
UC position on administrative spending at the University.  Several 
weeks later I wrote to President Atkinson (2/21&22/97) as follows.

     This letter is a followup on our previous communications 
regarding spending for administration within UC.

     The meeting you arranged for me to have with Larry Hershman, 
while sometimes contentious, served some useful functions.  My 
Report #19a brings to a logical conclusion the long-standing debate 
over the issue of purported budget cuts.  It remains for you and/or 
the Regents to take action on what I have called a major fraud; and 
I would be happy to discuss with you my ideas about appropriate

     In addition, at that meeting with Hershman I made specific 
requests for information and documentation regarding several issues 
which he raised in defense of UC's administrative budget.  Those 
items were written down and I was assured that the requested data 
and documentation would be collected.  The items were:

1. Overall accounting for UC expenditures on insurance.
2. Details of plans for "investment in technology" for administration.
3. Review of operations of the General Counsel's Office, including 
   expenditures for outside counsel, litigation, settlements, etc.
4. Details of Hershman's calculation of the ratio of administration 
   cost to all UC expenditures.
5. Hershman's study of the effects of external regulations on
   administrative costs.
6. Hershman's reports from the campuses detailing the cuts they have
   made in administration.
7. Details of the origins of the $102 million from "Other Sources" 
   which was spent last year on Institutional Support. 
   (See Campus Financial Schedules, Schedule 11-D.)

     It is now over five weeks later and I have heard nothing.  May 
I have a progress report?

I have never gotten any further response from the President's office
on this matter.

     If the UC systemwide administration, backed up by the Regents, 
is unable to defend its spending record and unwilling to engage in 
rational dialogue about this scandal, then perhaps this situation 
can be more productively addressed on each individual campus.  
Toward that end I present, below, further detailed data.

     Table 2 shows a seven year record of each UC campus' spending 
for all upper level administration.  This covers the accounting 
categories "Institutional Support" (managed from the Chancellor's 
office) as well as "Academic Administration" (managed from the 
Deans' offices) and includes the expenditures from Transfers 
(recharges).  Readers should understand that many other domains of 
administrative expenditures remain outside of these two categories:
those at the level of individual academic departments and research 
units, those classified under Student Services, as well as 
administrative components of Hospitals, Operation and Maintenance of
Plant, housing services, etc.  

     The data in Table 2 updates that presented in my Report #16  
of 1/10/95.

Table 2.  Institutional Support + Academic Administration 
                Total + Transfers        ($ Millions)
                                                          6 Years'
Campus       90-91 91-92 92-93 93-94 94-95 95-96 96-97    % Change

Berkeley      113   114   112   117   127*  134*  138*      +22%
Davis         103   102   102    98   100   113   124       +20%
Irvine         71    73    69    73    75    77    83       +17%
Los Angeles   203   203   190   194   215   227   234       +15%
Riverside      31    32    31    31    32    35    38       +23%
San Diego      85    89    88    89    98   111   104       +22%
San Francisco 115   129   131   130   139   138   163       +42%
Santa Barbara  43    43    42    43    45    48    49       +14%
Santa Cruz     25    28    28    29    33    37    39       +56%
SP&A**        133   129   142   151   136*  138*  134*      + 1%

Total**       922   942   935   955  1000  1058  1106       +20%

Source: Campus Financial Schedules, Schedules B.
*I have moved "Printing Services" from Berkeley back to SP&A, where 
it was counted prior to 1994-95.       ** Less Insurance Items

     Table 3, below, presents a more restricted set of data on 
administrative spending by each campus:  leaving out the Transfer 
amounts.  Most of this (Transfers/Recharges for Institutional 
Support) covers services such as telephone, mail, material 
management, duplication, computer centers, personnel, etc., which 
are centrally managed on the campus but paid for by the individual 
(or departmental) users of the service.  What remains, then, in 
Table 3 is the portion of administrative spending more directly 
attributable to the priorities of top administration officials on 
each campus.

Table 3.  Institutional Support + Academic Administration 
                Total w/o Transfers       ($ Millions)
                                                          6 Years'
Campus       90-91 91-92 92-93 93-94 94-95 95-96 96-97    % Change

Berkeley      73.2  74.1  73.2  71.7  80.2  90.4  90.6      +24%
Davis         50.4  50.2  49.4  45.2  51.6  61.5  72.0      +43%
Irvine        44.7  44.2  41.6  45.5  45.6  47.1  53.9      +21%
Los Angeles   92.9  98.1  88.7  96.1 110.9 117.1 120.7      +30%
Riverside     19.2  20.1  18.6  18.3  19.8  23.3  25.9      +35%
San Diego     49.1  52.3  50.8  51.8  59.8  73.2  61.8      +26%
San Francisco 51.9  56.0  52.2  53.8  58.1  56.0  73.3      +41%
Santa Barbara 28.5  29.4  28.8  29.2  31.1  33.0  33.2      +16%
Santa Cruz    16.3  19.5  19.2  19.9  24.6  28.4  29.1      +79%
SP&A*         82.9  70.2  78.2  83.1  72.1  73.6  76.4      - 8%

Total*       509   514   501   514   554   604   637        +25%

Source: Campus Financial Schedules, Schedules B.
* Less Insurance Items

     The figures in Table 3 are smaller than those in Table 2  but 
they show larger percentage increases over this period on almost 
every campus.  I would encourage interested parties on each campus 
to sit down with their Chancellor and ask for an in depth 
justification for the large increases in administrative expenditures
shown by this data.  Remember that the appropriate comparison to 
make is with the promised cuts of 25-30% in administration, which 
were supposed to be implemented during this period.



CASE 1.  Reports #21, 21a and 21b concerned an attempt by one regent 
(Charles Soderquist, Vice-President of the Alumni Association) to 
squelch this author.  Here is a report from an Academic Senate 
committee that looked into this matter.

                                                     June 18, 1997
Report by the UC Berkeley Committee on Academic Freedom 

Re:		Professor Emeritus Charles Schwartz
		UC Berkeley Physics Department

The Committee on Academic Freedom of the Berkeley Senate convened on
May 5, 1997 to study an issue brought forth by Prof. Emeritus 
Schwartz of UC Berkeley Physics.  This memo concerns a letter 
received by Prof. Schwartz dated 9 March 1997.  A copy of the 
original letter is enclosed.  The letter was written by a UC Regent 
in regards to Prof. Schwartz' reports, which mostly concern the 
University's financial affairs.  Prof. Schwartz distributes these 
reports to a mailing list of members of the university community and 
others, mostly via campus mail and email.

While the Committee felt that the letter was an isolated 
communication, it nevertheless is quite damaging to Prof. Schwartz' 
academic freedom by itself.  The Committee unanimously felt that it 
should make a statement on the matter.  There were other 
communications arising from this matter that were brought to the 
Committee's attention.  However, at the heart is the original letter,
and that is where the academic freedom issues lie.  That is the 
subject of this memo.

There were questions about the "official" status of the letter, 
which was sent by an individual regent directly to Prof. Schwartz.
There would be no need for discussion if the letter were a private 
communication between the regent and Prof. Schwartz. The letter was 
issued on the regent's company letterhead but all other factors 
point to it being an official communication and the Committee was 
forced to take that view.  It was signed by the regent as "regent-
designate," copied to the Chairman of the Regents and to the 
University President.  The events that have followed have forced 
retention of the letter in the files of those who received it, 
making it part of the California public record.

That brings us to the academic freedom issues.  The letter begins:

   Dear Professor Schwartz:
   Unless you can explain to me how the "public service" mission of 
   the University is met by your "reports,"  I request that you stop
   using University envelopes (and paper, postage, computers, desks,
   electricity &c.) in their preparation and dissemination.

In other words, the regent has requested that Prof. Schwartz must 
justify his reports to this regent, or stop using all University 
resources in writing them.  This is a very direct breach of Prof. 
Schwartz' academic freedom.  Without laboring the point, here is 
short summary from the Faculty Handbook:

   The Academic Senate has affirmed the right of faculty members to 
   make public the findings of their research, orally or in writing,
   free from censorship or restraint by any representative of the

The letter restrains Prof. Schwartz by (i) requiring justification 
(ii) applying or proposing to apply restraints on resources if the 
justification is absent or not adequate.  The restraint has some 
teeth because the board as a whole is certainly empowered to 
restrict campus resources, and apply further sanctions as well. This 
particular letter does not describe an action by the Regents, but at 
least hints that such an action may be in progress.  A priori, such 
action by the Regents is very unlikely.  But the original letter is 
no less extraordinary, and it casts doubt on the claim that no such 
action would normally occur.

The Committee noted that Prof. Schwartz' reports are funded by a 
Campus Committee on Research (COR) grant, and that his research 
proposal mentioned reports on the financial affairs of the 
University.  The regent was probably not aware that the reports are 
part of Prof. Schwartz' sponsored research, and so did not feel that
the letter would affect his academic freedom. However, academic 
freedom means that Prof. Schwartz alone should determine the best 
course of his inquiry. Whether the regent or anyone else agrees with
his findings or considers his a valid research direction should not 
be cause to restrict his research.  The COR grant demonstrates peer
support for his research, but such support should not be a 
prerequisite for his right to pursue it.

The letter continues:

   As to the value of your efforts, my brief time with the regents
   indicates that no one is listening. Perhaps your time could be 
   better spent on research and/or teaching. You do teach and 
   perform research, I assume.

which indicates that the regent did not judge Prof. Schwartz' 
reports to be a legitimate form of research.  This is in one sense 
understandable because Prof. Schwartz' home department is Physics, 
and financial/administrative reports would not normally be 
considered research within that department. But on the other hand, 
the reports were based on considerable information gathering and 
organization by Prof. Schwartz.  They represented his considered 
analysis, and were not pure opinion or fiction.  Whether one agrees 
at all with his methods or conclusions he deserves, prima facie, the 
protection of academic freedom to prepare and disseminate them.

Finally, the Committee noted that the letter had impact on Prof. 
Schwartz' academic freedom beyond the points enumerated above.  We 
believe the regent did not intend to infringe Prof. Schwartz' 
academic freedom and was unaware of the COR grant or the prima facie 
argument above for scholarly reports. Objectively, one must remark 
that the letter is harshly worded.  While this is of no import in a 
personal letter, in an official letter the situation is very 
different.  It mentions Prof. Schwartz' teaching and other research 
as well as his reports.  There is a summary conclusion that the 
Regents are not interested and that Prof. Schwartz' time could be 
better spent.  This document has become public and serves as an 
informal evaluation of Prof. Schwartz by this regent.  There are 
well-accepted mechanisms in the University for review of employees, 
and with good reason, much of this process is confidential.  From 
the Faculty Handbook under "Part I Professional Rights of Faculty":

   5. The right to be judged by one's colleagues, in accordance with
   fair procedures, in matters of promotion, tenure, and discipline,
   solely on the basis of the faculty member's professional
   qualifications and professional conduct.

Expressing opinions about the research of an individual faculty 
member (and its effect on his teaching and other research) in the 
format of the letter, now on record, can be quite destructive.  It 
affects Prof. Schwartz' credibility among his peers and may cause 
biases in the traditional evaluation process.

As to a resolution of the matter, the Committee hopes that the 
regent is now satisfied that Prof.Schwartz' reports are a legitimate 
research activity.  Some communication to that effect would put the 
matter to rest, and relieve Prof. Schwartz from any implied or 
actual obligation to provide further justification of his research 
to the Regents.

Since the letter seems to be an isolated communication, there are no 
more general issues to be addressed.  The Committee hopes that in 
future, more suitable channels will be used should questions be 
raised about a faculty member's activities.  We hope it is evident 
that a letter like this harms more than the reputation of an 
individual faculty member.  The public exposure of the affair harms 
also the reputation of the University as a whole, its unity, the 
mutual respect of its principals, and their support of its formal 
review mechanism

     I wrote a letter to Regent Soderquist (7/29/97), enclosing a 
copy of this report, explaining the function of the Committee on 
Academic Freedom, and offering this regent the following invitation:
"Can we two get together and discuss how this affair may be turned 
into something constructive and beneficial for the University?" 
I have received no reply.

     As far as I can tell, no responsible official of the Academic 
Senate or of the UC administration intends to do anything further 
about this matter; and so the Committee's report will simply gather 
dust in the files.  Thus I must conclude, unhappily, that academic 
freedom continues to be at risk for all faculty at the University of

CASE 2.  In an earlier document of the case discussed above, I wrote 
that this story "carries the implication that any regent may take a 
poke at any UC faculty member with impunity."  A subsequent example 
of just such regental misconduct (whether inspired by the Soderquist 
affair or not I do not know) occurred last summer.  As reported in 
the San Francisco Chronicle (7/12/97):

      University of California Regent Ward Connerly accused the dean
   of the Boalt Hall School of Law on the Berkeley campus of
   intentionally trying to keep minorities from being admitted to 
   the school in order to pressure regents to overturn their ban on 
   affirmative action.
      "I think the dean has consciously been throwing cold water on 
   the prospect of black students enrolling to foster the notion 
   that the passage of SP-1 (the regents' resolution) has been a 
   mistake," Connerly said in an interview yesterday. "I don't have 
   any proof of it, but I believe deep in my soul that this has been
   a conscious effort on the dean's part."
      Herma Hill Kay, the Boalt Hall dean, vigorously rejected 
   Connerly's assertion.  Colleagues said that if anything, Kay - 
   first hired as a Boalt Hall law professor in 1967 - has dedicated
   years of her life to increasing minority and female enrollments 
   at the school.
      Last month, Boalt disclosed that not one of the 14 black 
   students offered admission for this fall's class decided to 
      Connerly, who has led the fight to end affirmative action in 
   California, first made his charges against Kay in an National 
   Public Radio interview earlier this week.
      "I believe the dean has consciously been involved in trying to
   keep the numbers down, to sacrifice this class, if you will, in 
   order to perhaps get the regents to change their mind, and to 
   rescind the action." he said.
      Several of Kay's colleagues at the law school expressed 
   outrage at Connerly's remarks. ...


CASE 3.  Governor Pete Wilson used the UC Regents as a springboard 
for his own political ambitions in 1995 with the contentious issue 
of affirmative action.  This fall, he tried once again to abuse his 
power over the University's governing body, this time trying to 
score political points over the issue of domestic partner benefits.

     As reported in the San Francisco Chronicle (11/22/97):

      The governor had mounted a full-court press to defeat domestic-
   partner benefits beginning in September, when he insisted on a 
   regents' vote before [UC President] Atkinson could go ahead with 
   his plan.
      He then appointed three new regents - all "no" votes on 
   domestic partners - to vacant seats on the board during the past 
   three days. Besides Wednesday's appointment of ..., Wilson swore 
   in ... and ... yesterday at 8:30 a.m. - two hours before the 
   regents were scheduled to begin debating the issue.

     A later story (San Francisco Chronicle 12/31/97) discussed the 
situation of some of Wilson's friends on the Board, especially 
regent Ward Connerly,  who did not vote with the governor on this 

      Sean Walsh, a Wilson spokesman, said ... "Clearly, the 
   governor and his staff would have preferred to have seen Ward and
   other regents vote to deny domestic partner benefits, and clearly
   some of the staff were not happy with the outcome, but that was
   simply a matter of frustration about not being able to deliver on
   your boss' political agenda."

     Some may take solace in the fact that Wilson lost this time, by
a one-vote margin.  However, anyone who values the principle of 
political independence for maintaining a high-quality university 
should worry about the continuing vulnerability of the University of 
California in the hands of its highly politicized Board of Regents.