LOOKING INTO THE UC BUDGET  -- Report #8a      (e-mail version)

by Charles Schwartz, Department of Physics, University of California
Berkeley, CA 94720.        510-642-4427         February 28, 1994

                    INITIATIVE & RESPONSE

     In my Report #8, dated December 20, 1993, concerned with the 
impacts of increasing student fees,  I looked into a question that 
had previously been obscured: What is the per-student cost of 
undergraduate instruction at UC?  The UC President's Office has used
the figure $12,168 as the full cost of instruction in 1991-92, 
averaging all General Campus instruction over all students.   In my 
analysis, I separated the undergraduate portion from the graduate 
portion and found a current cost of $5,040 per-student per-year for 
undergraduate education (covering "tuition plus fees"), noting that 
this figure was less than one-half of the amount claimed by the UC 
administration.  This raised a fundamental challenge to the 
University's current plans and financial policies, affecting not 
only the level of undergraduate student fees but also the future 
support of faculty research and graduate education.

     The President's Office has responded to that challenge with the
following letter.

                                                   February 16, 1994
Dear Professor Schwartz:

I write concerning your "Report #8" ... 

With respect to the cost of instruction, there are a number of 
different approaches one could take. We spent over a year developing
the methodology which established the cost of instruction at $12,168
in 1991-92, and that methodology was reviewed and concurred in by 
the California Postsecondary Education Commission, the Department of
Finance, and the Legislative Analyst's Office.  Thus, $12,168 
reflects a consensus among interested and knowledgeable parties, 
even though other methodologies are certainly possible.  As we have
clearly stated, the figure represents an estimate of the average 
cost of education for undergraduates and graduates combined across 
all disciplines.  There is no factual basis for your statement that
the real cost per undergraduate is "less than half the amount 
claimed by UC."  We have made no claim regarding the separate cost 
of either undergraduate or graduate education.

You calculate the cost of education for undergraduates at $5,040.  
Using your methodology, the cost for graduate students would be 
$15,770--although you do not provide this figure.  The issue of 
charging higher fees to graduate academic students (i.e., not 
including students in selected professional schools) has been a 
topic of discussion at several Student Fee Advisory Committee 
meetings within the University since 1992 as well as at a 
Universitywide forum on fees and financial aid held August 6, 1993,
and at meetings with the California Postsecondary Education 
Commission prior to the adoption of the Commission's staff reports 
on development of a statewide long-term student fee policy.  CPEC 
recommended against higher fees for graduate students.  In our own 
examination of fees charged at comparable universities, it has 
become clear that in order for UC to remain competitive and 
continue to attract top graduate students, most of the revenue from
higher fees would need to be used for financial aid.  In the end, 
there would be very little financial gain if we were to charge 
higher fees to graduate academic students.

In any event, as you know, The Regents have adopted a fee policy 
which includes the cost of education as only one of a set of factors
that will be considered when fee levels are adjusted.  Other factors
include the level of support for the University provided by the 
State and fees charged at comparable institutions.


                                      Larry Hershman
                 Associate Vice President and Director of the Budget

                        WHAT'S IN THE LETTER

     There is only one point in Hershman's letter where he disputes
something I said in my Report #8:  

   "There is no factual basis for your statement that the real cost 
   per undergraduate is 'less than half the amount claimed by UC.'  
   We have made no claim regarding the separate cost of either 
   undergraduate or graduate education."  

While Hershman's legalistic definition, "We have made no claim ...,"
refutes my statement as far as he is concerned, here are some 
writings from other top UC offices and officials that contradict him:

**from UC Focus, Published for the faculty and staff of the 
University of California by the Office of the President, February/
March 1994, lead story, reporting on the Regents January 21 meeting:
   "Under UC's budget plan, undergraduate student fees would 
   increase by $620 or 17 percent next fall.  With that increase, a 
   resident undergraduate student would pay an average $4,347 in 
   1994-95 or about a third of the cost of their education.  The 
   state still would subsidize more than 60 percent of the estimated
   $12,800 average annual cost of an undergraduate student to 
   attend UC."

**from the formal student fee policy document presented by the 
Office of the President to the Board of Regents and approved by them
in January (Item #1 and Item #5, page 2):
   "With 1994-95 Educational and University Registration Fees 
   proposed at $4,074 for undergraduate resident students, students 
   would be paying slightly less than a third of the cost of their 

**from an Op/Ed piece by Regent William T. Bagley, in the San 
Francisco Chronicle, 1/26/94:
   "Simple arithmetic tells us that undergraduate education at UC 
   costs about $13,000 per year per student.  Undergraduates now 
   pay about 30 percent of that total."

I think the contradiction seen here can not be explained as a 
careless error being made by each of these authoritative writers - 
linking the $13,000 figure with the educational cost of 
undergraduate students. It seems more likely that this is a 
deliberate attempt to obscure the facts and mislead the public.

     Hershman's middle paragraph, arguing against the idea of 
charging higher fees to graduate academic students, is rather 
strange, since I propose no such thing. In my Report #8 I said, 

   "The financial arrangements that UC makes for its graduate 
   students in PhD programs, preparing them for careers in research,
   college teaching, etc., are completely unlike those for the 
   undergraduates. Teaching Assistantships, Research Assistantships,
   tuition wavers, fee remissions, and various fellowships are 
   provided to recruit the best talent from across the nation and 
   around the world and to provide, wherever possible, complete 
   financial support for these budding scientists and scholars."  

This was part of my argument for separating undergraduate and 
graduate instruction as two very different enterprises.  It thus 
seems that Hershman is supporting my point of view, although he does
not acknowledge that.

     Hershman spends some time bolstering the case for his 
methodology (not just a different calculational method, but 
answering a different question) by referring to several government 
bodies that have agreed with him in calculating the combined cost 
of instruction, undergraduate plus graduate.  I can understand that 
the higher figure he obtains that way serves the particular interest
of Sacramento, as well as the particular interest of UC's management.
But that weight of authority does not necessarily make it right.  In 
particular, one motive for my study was the recognition of the 
different interests of a new party which the University will have to
deal with - the students and their families who are being made to 
foot the bills that the State will no longer pay.

                    WHAT'S NOT IN THE LETTER

     In Report #8 I laid out in detail the concepts, the process and
the numbers that went into calculating the cost of undergraduate 
instruction.  Hershman quotes my result ($5040 per undergraduate 
student) and voices no criticism of my method or of the details of 
my calculation.  I take this as a positive endorsement of my work.  
There are a number of details one could argue about, some pushing 
the number down and others pushing it up; but for now I will stay 
with this earlier result.

     The most profound silences in Hershman's letter concern the 
fundamental assertions and analyses of my Report #8, things that 
came before and after the exercise with numbers.   

     I expounded, "the idea that UC must be fair in charging 
students and their families for no more than what they get," and 
Hershman says nothing about this.  Fairness is a bedrock principle 
of our society, of our laws, and, I hope, of our University.  Yet, 
the plans that the UC President has presented, and that the Regents
have approved, involve something that appears quite unfair.  Within 
two years the level of fees charged to undergraduate students at UC 
will exceed 100% of the cost of undergraduate instruction.  That is,
it appears that part of the UC Administration's plan is to make 
undergraduate students and their families subsidize other remote 
parts of the University's operations - principally faculty research
and the graduate academic (PhD) programs with which that research is
intimately connected.  

     It is of the utmost importance that this topic be fully and 
openly debated by the Regents.  Will undergraduate student fees be 
allowed to rise above the ceiling defined by the full cost of 
undergraduate education?  To avoid this question, as Hershman has 
chosen to do in writing his letter, does not make the problem go 
away; delay and obfuscation will only make the eventual reckoning 
more painful for the whole University.

                   THE QUESTION OF QUALITY

     The word "quality" is usually the first one used by UC 
officials to define their priorities in these hard financial times.
Quality usually refers to the research reputation of the faculty, 
especially in comparison to other top universities. Quality is also 
used in connection with the university's instructional program and 
again comparisons are drawn with other select universities. Hershman
mentions that the level of UC student fees will be sensitive to 
"fees charged at comparable institutions." 

     The most often used measure of educational quality is the 
Student/Faculty Ratio. The Office of the President says UC's ratio 
is 18.6, while its four public comparison schools average 17.8 and 
its four private comparison schools average 10.4.  Here, again, I 
say one should separate undergraduate students from graduate 
students in calculating Student/Faculty Ratios.  Using data provided
by UCOP and CPEC I have calculated the following:

   Table 1.   Ratio of Undergraduate Students to Faculty

   University of California                        15.1
   Average of 4 Public Comparison Universities     12.9
   Average of 4 Private Comparison Universities     5.0

     The huge difference between the top and the bottom numbers in 
this Table has its historical roots in the mission of the public 
universities to educate large numbers of undergraduates, while the 
elite private research universities (Harvard, MIT, Stanford, Yale) 
have kept their undergraduate classes small.  By this measure an 
undergraduate education at the elite private universities is far 
richer, and thus the far higher tuitions they charge may be 
justified.  Conversely, UC (and the other public universities) 
cannot justify anything close to those sky-high fees; and UC even 
looks somewhat worse than the comparison public universities.  
(Looking at graduate students only, the ratio is rather close among
all these schools; and this reflects the real basis for the 
selection of comparison institutions.)

     This new data casts further doubt upon the moral legitimacy, 
and even upon the marketability, of higher undergraduate fees at UC.