What Governor Brown’s May Budget Proposal Means for UC

UC President Mark Yudof and Governor Jerry Brown are working out a deal behind closed doors that will loosen the most important ties between the university and the state.

Although they will both praise the deal by saying that it “stabilizes” funding while granting greater “flexibility,” its essence is that each will let the other off the hook: UC will mute complaints that it does not get enough money from the state and the state will stop holding UC accountable for the money it still gets.

The likely result is that UC will dump a larger number of eligible Californians onto the CSU and Community Colleges, which will in turn pass on their overflow to for-profit schools, where students take on inordinate amounts of debt with a very high likelihood of default.

Here are some key elements of the deal:

* UC will continue to raise tuition-at least 6% based on the Governor’s January budget proposal, likely more now that the Governor’s May revise reduces UC funding by $38 million, and much more if the Governor’s fall tax initiative fails to pass. (http://www.universityofcalifornia.edu/regents/regmeet/may12/f8.pdf, pg. 2)

* UC will no longer promise the state that it will admit a fixed number of California students in return for the enrollment funding that the state provides. For next year, and presumably from now on, UC will be allowed to use taxpayer funding as it pleases, without being accountable for the number of in-state students it educates (http://www.lao.ca.gov/analysis/2012/highered/higher-ed-020812.pdf, pg. 19). This means that UC is likely to enroll fewer California students, and to replace them with out-of-state and international students who pay more. The likely result is that UC will be able make more on average from its enrollments, that the state is likely to pay less, and that middle-income Californians will get less access to UC.

* UC will henceforward be allowed to commingle the state funds it uses for operations, such as teaching, with the funds it uses to pay debt service on new construction (http://www.dof.ca.gov/documents/2012-13_May_Revision.pdf, pg 43). UC has said that this added “flexibility” in its use of both state and non-state funds will allow it to squeeze out more for operations by delaying or stopping unnecessary construction projects. But since 2004 it has been doing the opposite, squeezing operational budgets that could be funded by higher tuition to leverage more construction. The state should have held UC accountable for its use of higher tuition on California students to gain greater access to the construction bond markets, which were impressed by its ability to increase enrollments while raising prices. Instead, the state will give UC carte blanche in its use of both state and non-state funds. It might use this greater flexibility to spend more on construction. But from now on no one will ask, and no one will know.

Finally, UC will be able to say that how much it spends to educate Californians and how many of them it enrolls is its own business, and not the state’s. If UC thinks its traditional mission is a money-loser, it can now use its continuing, but declining, revenues from the state to diversify into fields where it sees a brighter future. It will not be expected to draw on its other, more entrepreneurial, activities to subsidize public higher education, but instead will be allowed to use state educational funds to subsidize these other activities — and especially the capital projects necessary to get them off the ground.

The core of the agreement between the Governor and UC is that UC will no longer be held accountable for its priorities in the use of any of its resources (public or private) — and especially for making it a priority to educate Californians.

Under Governor Schwarzenegger, UC got the state to agree that it should provide only as much public higher education for Californians as the state is willing to pay for. Under Governor Brown it will be free to provide even less than the state is willing to pay for. Unless this agreement is reversed, state funding for UC will continue to fall as UC separates itself from the rest of California’s Master Plan. We are reaching the point of no return.