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 CONTENTS 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: firstname.lastname@example.org I. UC EXPENDITURES FOR ADMINISTRATION 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 remedies. 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. __________________________________________________________________ II. REGENTS' MISCONDUCT - THREE CASES 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 University. 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 California. _________________________________________________________________ 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 attend. ... 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 issue: 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.