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The UCLA business school—the Anderson School of Management—will take its prestigious MBA program private, ending its reliance on public funding from the legislature and substituting private contributions and higher tuition. The plan, originally turned down by the Academic Senate, was narrowly approved yesterday by a different body, the Legislative Assembly. Ad Policy

Advocates of the plan, who include Chancellor Gene Block and Anderson School Dean Judy D. Olian, argue that adopting a market-oriented approach will raise the ranking of the school by enabling it to raise more money. That in turn will make UCLA’s business school more competitive with Harvard, Yale, and Stanford by allowing it to recruit superstar faculty with super salaries–and also recruit higher-ranked students. (UCLA’s Anderson School currently is ranked #15 by US News & World Report.)

Business school leaders argue that the state’s $8 million contribution to their budget will now be used to support more needy parts of the university, like the undergraduate college. You might call that a generous offer; you might call it a bribe—let us go private and we’ll give you $8 million.

But what makes them so sure the $8 million they are renouncing will in fact go to other parts of UCLA? It’s not the business school’s money to give away. And any business school student will tell you that, if a unit doesn’t need $8 million, the central administration should take it back. Reassurances from the chancellor on this point were unconvincing to many on the faculty.

Opponents of the move argue that privatizing part of the university undermines the university’s mission as a public institution that serves the entire state. A private institution of course serves its own interests and those of its funders. Opponents also point out that a private MBA program won’t have to follow the rules and requirements of the university, especially in regards to admissions and other issues of fairness.

The business school already raises hundreds of millions privately—why not simply continue that practice while remaining part of the university? What do they gain from going private? Two things: they will be able to raise tuition, which is now set by the system (at $44,000. apparently they would like to raise it another $10,000 or $15,000, which they regard as “market level.”)

And, business school leaders say, some of their promised contributions have the condition that the school must go private. They say they will be able to raise even more money if they are not part of the University of California. You might call that a generous incentive from donors, or you might call it a bribe—we’ll pay you for abandoning the public.

Then there are a variety of “slippery slope” arguments. The basic message to the state legislature and the taxpayers is that we don’t need to restore adequate public funding for the university—the solution instead is to privatize. Any group that can go private, should.

Within UCLA the “slippery slope” argument asks which other prestigious parts of the university could be next: the Medical School? The Law School? While the deans of those schools seem to have no interest at the moment in going private, the precedent has clearly been set—and the incentives are the same: take in more money, gain freedom from university fairness requirements. Those who can’t privatize will be increasingly marginalized, and disparities between the public and private parts of the university will inevitably widen.

Outside of UCLA, there is anxiety at the less prestigious campuses of the university—Riverside, Irvine, Santa Barbara etc.—that UCLA and Berkeley will pull away from the other seven campuses and establish a separate privileged status, relying partly on private funding.

Academic Senate leaders also pointed out that the university has spent seventy-five years building the UCLA business school, creating whatever value it now has. How is the school going to compensate taxpayers for the takeover of this historical investment?

The Senate leadership suggested that the market model was inconsistent with the research mission of the university as well as its commitment that faculty engage in public and community service.

The university’s official statements described the plan as “self-sufficiency” and denied that it amounted to “privatization.” Before being put into effect, the plan has to be approved by University President Mark Yudoff, which is expected.