Future of UC System in Hands of “Committe of Two”

March 20, 2015 By Joel Fox 1 Comment

Ironically, in the midst of Sunshine Week, designed to create more open government and freedom of information, the “Committee of Two” considering the financial situation of the UC system – Gov. Jerry Brown and University of California President Janet Napolitano – are not forthcoming in revealing details about their negotiations. Despite protests to the contrary, this may be a necessary thing.

Yesterday at the UC Regents’ meeting in San Francisco, both Brown and Napolitano did a two-step around whatever progress is being made in their talks about the proposed tuition increase. Napolitano and the Regents supported tuition increases if the university system did not get more money from the state. Brown refused to be bullied.

Now the two are working on a plan that will try to re-set some university finances without raising tuition or dramatically increasing the state’s contribution. Not an easy task, but they claim they are making progress.

That doesn’t stop critics from demanding the negotiations be more open. As one student was quoted in the Sacramento Bee, “We need a committee that not just represents a committee of two, but a committee of 240,000,” referring to the number of students in the system.

University business

Are private talks setting government plans ever the way to go? Historians have suggested that, if the United States Constitution was cobbled together in open meetings the document would be much different and, they suggest, not better.

Tackling tuition hikes is not the same as constitution writing. However, to continue the broad analogy, what comes out of these private meetings may set a course of change for the way the university does business, just as the long ago constitution-writers went beyond their original assignment of fixing the Articles of Confederation.

I know – a little bit of a grandiose comparison.  But it is quite possible the UC system might look and feel quite different if the negotiators come to an agreement and any proposed changes are approved after debate. Online courses, larger teaching loads for professors and a shorter time to graduation all may alter the university experience as we have come to know it over the last few decades.

Whatever the Committee of Two comes up with would have to withstand vigorous public debate. There is no guarantee any Committee of Two proposal will pass the test. I served on a half-dozen state commissions over the years and few commission recommendations were turned into state policy.

Pensions

One big issue that is affecting all government-related organizations is employee pensions and health costs. When the issue of raising tuition first surfaced, the university’s financial division pointed to pension costs as one of the culprits. That issue must also be part of the negotiations, along with rising retiree health care costs.

We will see if the Committee of Two can come up with any solutions on the pension/health care front that succeed and maybe set the course for reform in this area for other government entities.

One suspects big changes are coming to the UC system. Getting the ball rolling is happening in private.

This piece was originally publish by CalWatchdog.com

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UC’s Perfect Storm of Unmet Budgetary Obligations Puts Pressure on Students

March 17, 2015 By James Poulos Leave a Comment

With the University of California system in the midst of a tense tuition standoff, budgets have come under renewed pressure in recent weeks. Not only schools, but students and parents, have felt the pain.

As CalWatchdog.com has been reporting, the UC system has been wracked with a series of fiscal setbacks, some self-imposed. A computer system overhaul designed to save $100 million through a $170 million investment has slippedout of budgetary control, currently two years behind schedule and $50 million in the red.

Meanwhile, UC President Janet Napolitano’s insistence on 28 percent tuition hikes over five years has spurred outrage and opposition from students across the university system as well as push-back from Gov. Jerry Brown, also a UC regent. Fueling the frustration, students and teachers alike have run up against such challenges as covering basic living costs.

Health care woes

As the Los Angeles Times reported, promises made to teachers about health care coverage have begun to go unmet:

“California Common Sense, a nonpartisan research group founded at Stanford University, estimates that state government, cities including San Francisco and Los Angeles and the University of California system contribute to $157 billion in statewide retiree health care obligations. Only about $7 billion has been set aside by those surveyed by the group, leaving $150 billion in debt.”

The problem extends throughout California governments. In a study released last December, Controller John Chiang (now the state treasurer) warned:

“The unfunded liability of providing health and dental benefits for state retirees under the current funding policy is $71.8 billion. The amount represents the present-day cost to provide benefits earned as of June 30, 2014, which is expected to be paid over the lifetime of current and future retirees.

“The total unfunded obligation grew $7.2 billion from the $64.6 billion obligation identified as of June 30, 2013.”

Faced with steep costs of living, including for health care, the student population in the Golden State has embraced the Covered California health exchange — the state’s implementation of the Affordable Care Act, or Obamacare.

According to California Healthline, “Researchers released poll results that show dramatically low rates of uninsured students at California State University campuses, including a steep drop in the number of Latino students without insurance.” Since October of 2013, for instance, enrollment rates at Cal State Los Angeles dropped the uninsured rate from 41 percent to just 10 percent.

Free lunch

Just as students have flocked to subsidized health care, an increasing number have sought out free food options in an effort to balance out the cost of tuition and living expenses.

At some UCs, the cost of room and board alone exceeded $14,000 a year. At UC Berkeley, where housing is the fifth most costly in the nation, according to one survey, the figure topped $15,000.

As Southern California Public Radio reported, over the past four years about half of students polled “said they skipped meals to save money ‘occasionally’ to ‘very often.’

“And at UCLA, officials distributed in the last academic year some 3,884 meal vouchers for students in dire circumstances facing a food shortage. In 2012-2013, it gave out 7,562, and 4,652 the year before that. UC Irvine has budgeted for fewer than 100 in the first year of its voucher program.”

Ironically, SCPR observed, as the result of a hunger initiative spearheaded by Napolitano, most of the UC system’s campuses now offer students the use of food pantries.

Competing priorities

The perfect storm of budgetary strains has made its impact felt in Sacramento, where lawmakers haven’t made up their minds how much more cash to allocate to the UCs.

The most recent addition to the UC system, in Merced, opened its doors in 2005. Yet Assemblyman Mike Gatto, D-Glendale, has proposed a big new investment in yet another campus. According to the Sacramento Bee:

“The Los Angeles Democrat announced a bill Monday that would set aside $50 million for a feasibility study, land acquisition and initial building costs for a ‘UC-Tech’ campus centered on science, technology, engineering and mathematics fields, as well as the arts.

“‘Now when we have these budget surpluses is the time for bold moves,’ Gatto said.”

But in all likelihood, for most Californians in and out of school, the state has already racked up enough unmet obligations.

Originally published by CalWatchdog.com

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UC Board Votes to Support Divestment Movement

February 17, 2015 By Joel Fox 2 Comments

The University of California Student Association board voted to support a resolution to divest from companies that do business in certain countries including the United States. While college students often make statements and take action on political matters, the timing of this advocacy could see the action become tangled up with the ongoing debate over tuition increases and funding for the University of California system.

The vote was in conjunction with the on-going Boycott, Divestment and Sanctions movement designed to divest from companies doing business in Israel. Student governments at UC Irvine, UC San Diego, UC Berkeley, UC Riverside, UCLA and UC Davis have already passed nonbinding resolutions supporting divestment.

While the resolutions have no power, students intend to make an issue of divestment with the Board of Regents.

The Committee of Two looking into UC’s funding, Governor Jerry Brown and UC President Janet Napolitano, are unlikely to consider this issue. However, others may inject the divestment votes into discussions over UC funds.

Already, some donors have told UC branches that the divestment vote will discourage them from making additional gifts to the university. But could it play a wider role in the taxpayer funding of the university system?

American businesses are the targets of the resolution. Whether the particular businesses sponsor university events, the business community will take note of the action and perhaps hesitate in sponsoring university events.

But to a larger extent, expect concerned anti-divestment Californians to lobby their legislators to make a statement by perhaps threatening to affect university funding.

While a big effort is on-going to increase university funding, as demonstrated in an article published last week on this site, university funding could become a proverbial political football that was just kicked-off by the student association vote. Expect some critics to tie a divestment movement against some countries including the USA into a divestment effort against the university.

Joel Fox is Editor of Fox & Hounds and President of the Small Business Action Committee

Originally published on Fox and Hounds Daily

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UC budget Fight: Brown Playing 3D Chess, Napolitano Playing Tic-Tac-Toe

January 19, 2015 By Chris Reed 2 Comments

Gov. Jerry Brown has upped the stakes in his fight with University of California President Janet Napolitano over who is ultimately in charge of UC budget and tuition decisions.

Napolitano’s success last fall in getting UC regents to approve a five-year, 28 percent tuition hike conditioned on how much state funding UC receives is what triggered the fight.

In his newly released state budget, the governor not only ignored her call for more funding, he indicated a preparedness to micromanage UC over whom it admits. The Los Angeles Times’ George Skelton depicted Brown as having …

… essentially stiffed UC President Janet Napolitano and the regents, who have threatened to raise tuition again unless the state chips in substantially more money.

Brown re-offered only last year’s deal: a 4% increase, or about $120 million, if the university keeps tuition flat. UC previously said that wasn’t enough. “The $120 million is not chump change,” the governor insisted.

And he threw in a new condition: No additional out-of-state students, who pay triple tuition, crowding out California kids. UC was “created by the people of California … for the citizens of the state,” he declared.

The populist quality of his admissions maneuver will serve Brown well politically — even if it goes against his normal posture of budget pragmatism. Out-of-state students pay so much in tuition that they shore up financing for UC and relieve pressure on the state budget.

Brown, Legislature > Napolitano, regents

But the insiders and UC watchers I have spoken with think the governor is playing three-dimensional chess and Napolitano is playing tic-tac-toe.

Brown and the Legislature want to get credit for tuition relief for the middle class. Napolitano wants to have a bigger budget but has yet to convince the public or the media that UC is in dire straits.

The governor just won a landslide re-election by making the case he is a careful fiscal steward of the state. Napolitano has no political base in California after years as governor and attorney general of Arizona and homeland security czar for the Obama administration.

Given these facts and circumstances, it’s difficult to see how Brown can lose this fight. The more interesting question is whether Brown will allow the UC president to save face by making some concessions. To this point, he’s not just content to accept the narrative of her as an adversary, he’s actively encouraging it.

Skelton thinks this may be the end game:

Brown wants to negotiate with Napolitano over university cost-cutting, which could include professors spending more time teaching and less researching.

But that would only be a further humiliation for Napolitano, who has repeatedly declared her intention to keep the UC system as one of the world’s great centers of research.

If Napolitano went along, it would also likely trigger a sharp reaction from the UC Faculty Senate.

The former Arizona gov may already regret challenging the current California gov so directly.

– See more at: http://calwatchdog.com/2015/01/18/brown-ready-to-micromanage-uc-wont-defer-to-napolitano/#sthash.uk90kixi.dpuf

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Brown’s Budget Sends Message to UC

January 11, 2015 By James Poulos 2 Comments

Fresh from his historic inauguration to a fourth term as governor, Jerry Brown unveiled his proposed 2015 budget with a Friday press conference that swiftly attracted reactions from Sacramento and beyond. All told, Brown envisions a general fund totaling $113.3 billion. It’s an eye-popping figure to some, but a relatively modest one for California observers who have watched Brown curb the excesses of his party’s more profligate wing.

Amid rampant speculation that he would make up for this winter’s embarrassing loss on the University of California tuition-hike issue, Brown made education one of the centerpieces of his approach — giving UC more money, but not as much as they sought. It was a characteristic maneuver, showing how Brown’s main challenge in his final term will involve placating big-budget Democrats without drawing the ire of Republicans focused in a pre-election year on economic growth.

But it also can be seen as just an opening salvo in his battle with UC President Janet Napolitano, who wants to raise tuition 28 percent over the next five years.

Feast or famine?

The college controversy surrounding the UC budget took center stage during Brown’s presentation. Not only was his reputation on the line. Last year the Board of Regents secured itself a raise while hiking student tuition.

But Brown’s basic governing strategy went to work. He offered UC $120 million more for the year. From his standpoint, the allocation was generous, with some other parts of the government in Sacramento receiving no increases at all.

But for UC, it was a miserly, even retaliatory, gesture. As the Fresno Bee reported, Napolitano is on record claiming that Brown’s sum isn’t adequate to keep up UC’s current level of quality.

In fact, Brown’s dig at UC went deeper, as shown in K-12 and community college spending. “Brown’s proposal includes a $2.5-billion funding increase for schools and community colleges, the result of higher-than-expected tax revenue,” reported the Los Angeles Times.

The lopsided approach to funding schools appeared to do what Brown had hoped — tamping down criticism despite leaving the door open for a renewed battle with the University of California.

In a quick roundup of reactions from Democrats, the Sacramento Bee found a common theme: praise for the K-14 figure, paired with somewhat muted criticism on the subject of increased social services spending. Tom Torlakson, the union-backed Superintendent of Public Instruction, gave Brown “an ‘A’ for K-14 education,” although he paradoxically suggested “we still have a long way to go.”

State Sen. Tony Mendoza, D-Artesia, called himself “extremely pleased” with Brown’s $8 billion allocation. While Assemblyman Jim Cooper, D-Elk Grove, called the budget “great news for California’s kids” and suggested legislators only “prudently examine restoring cuts” to what he called “vital social services.”

Courting Republicans

Although GOP power in Sacramento is still a shadow of its former self, Brown indicated through his budget that he hopes to avoid a full-blown conflict with Republicans on fiscal-responsibility issues. Calling California’s financial situation “precariously balanced,” he indicated his desire to “avoid” the “boom and bust” of budgets in years past.

Warning against “exuberant overkill,” he gave Republicans a rare opportunity to offer measured praise without showing weakness. As the Los Angeles Times observed, Brown pointedly excluded funds that would provide Medi-Cal to unlawful and undocumented immigrants — a measure currently under consideration in the Legislature. Further, he vowed he’d work together with both parties to address California’s basic infrastructure problems, including Republican grievances like state roads.

Assembly Republicans reached by the Bee struck a common theme resonant across the GOP: Brown’s budget could be taken seriously, even if it was a disappointment. Melissa Melendez, R-Lake Elsinore, and Republican Leader Kristin Olsen, R-Modesto, both emphasized the state’s need for a plan for economic growth.

With voters approving the recent Republican-backed rainy day fund, Proposition 2, and Brown willing to sustain the reserve, Republicans have reason to believe putting careful pressure on Brown over the course of this year could pay dividends.

This article was originally published by CalWatchdog.com

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CA Senate Jumps Into UC Tuition Fracas

December 10, 2014 By James Poulos 1 Comment

Maybe kids and their parents won’t have to pay higher University of California tuition.

Last month, Gov. Jerry Brown tried to reverse UC President Janet Napolitano’s 25 percent tuition hike over five years. But she outmaneuvered him at a Board of Regents meeting.

Now the California Senate is moving to the head of the class. Senate Bill 15 is by state Sen. Marty Block, D-San Diego. As his website explains:

“The proposal upgrades the State’s current financial aid system so it can support all California students more effectively and provide incentives for completing college within four years. The plan also proposes a higher tuition premium for non-resident UC students and a transition of the Middle Class Scholarship program.”

It was co-introduced by new Senate President Pro Tem Kevin de Leon, D-Los Angeles. The tuition increase for out-of-state students would top $4,000.

Although the UC and CSU systems have expressed interest in the bill, its fate will be out of their hands. The Assembly has not yet offered any enthusiasm.

The bill was a response, according to the San Jose Mercury news, of how Napolitano “put the onus on the Legislature and the governor to repair the damage: If they came up with more money, she suggested, the tuition increases would not need to be as large.”

Ending independence

A more radical bill is Senate Constitutional Amendment 1, by state Sen. Ricardo Lara, D-Bell Gardens. The bipartisan bill was co-authored by Sens. Anthony Cannella, R-Ceres, and Joel Anderson, R-El Cajon.

SCA1 would amendment the California Constitution to take away the UC’s independence.

“The bill doesn’t list specific powers lawmakers would have over UC, where the governor-appointed regents are currently the highest authority,” the Chronicle reported. “But, under the bill, the elected officials would have the final say over any policy approved by the regents, from tuition levels to executive compensation.”

While the UC system has controlled its finances autonomously since the original California Constitution was signed in 1848, the Cal State system faces oversight from Sacramento — an arrangement seen as a model by Lara and Cannella.

As a constitutional amendment, SCA1 would need a two-thirds vote of of both houses of the Legislature to be put before voters in 2016.

Frustration

California voters have not yet weighed in on SCA1, but current polling has showcased their own frustration.

The Public Policy Institute of California found strong opposition to tuition increases and tax increases alike, with 77 percent opposing hikes that hit students, and 58 percent siding against hits to their pocketbooks.

Yet the poll also found just over half of respondents felt funding for public higher education was too low.

The desire for more spending but lower taxes and tuition will be hashed over in the Legislature, by the governor and by voters over the next several years.

This article was originally published by CalWatchdog.com

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The real reason behind proposed tuition hike at UC

December 5, 2014 By CPR Editors 9 Comments

Claiming impossible budget pressures, University of California president Janet Napolitano late last month proposed a tuition increase of up to 5 percent a year for the next five years. A divided university board of regents approved Napolitano’s plan by a vote of 14-to-seven. But Napolitano says the new tuition hikes could be avoided if the state legislature allocates another $100 million in funding to the university in the coming fiscal year. In some states, the former Homeland Security secretary’s demands would be considered extortion. Not in California. UC students and Golden State taxpayers will end up paying the price.

If Napolitano’s plan stands, UC tuition will eventually reach $15,564 a year, not including room, board, and other fees. That’s double the cost from just a decade ago. In inflation-adjusted dollars, UC tuition hasincreased three-fold since 1992. The university has come a long way since its 1960 master plan, which affirmed California’s “long-time commitment to the principle of tuition-free education to residents of the state.”

Napolitano’s proposal met stiff resistance from Governor Jerry Brown, who said at the November 19 board meeting that the university needs to look at cutting existing expenses before demanding more taxpayer dollars. He wants a special commission to convene in early 2015 to look at such cost-saving alternatives as online classes, three-year graduation programs, and course credit for work and military experience. Brown serves as a voting ex-officio member of the regents, along with Lieutenant Governor Gavin Newsom, Superintendent of Public Instruction Tom Torlakson, and assembly speaker Toni Atkins. All are liberal Democrats and all voted against Napolitano’s plan. What does it say when even California’s typically profligate Democratic leaders want the university to boost savings rather than tuition?

The politics here are straightforward. In 2012, Brown campaigned for Proposition 30, an ostensibly temporary income- and sales-tax increase that voters approved in large part because of the governor’s veiled threats to slash education programs. The University of California pulled out all the stops to help the governor pass the measure, warning students that tuition could go up as much as 20 percent in a single year without the tax hike. At the same time, Brown agreed to boost the state’s contribution to the university’s budget by 20 percent in exchange for a four-year tuition freeze. But the university would like a larger slice of Prop. 30 revenues—hence the current tuition fight.

Napolitano says her $27 billion budget will allow her to expand course offerings and enroll 5,000 additional students across UC’s ten campuses. But the real driving force behind the tuition hike is the university’s woefully underfunded pension system, which currently serves 56,000 retired employees. It’s a generous system, despite some reductions the university made for new hires in recent years. An Associated Press analysisfound 2,129 retired UC employees collect pensions of more than $100,000 a year; 57 receive more than $200,000; and three receive more than $300,000.

The trouble is UC’s pension system is only 75 percent funded. Why? Because a budget crisis 24 years ago led California’s legislature to end taxpayers’ contributions to the UC pension fund. It was an easy decision to make in the early 1990s, when the university’s finances were still in good shape. But as the Sacramento Bee notes, the regents also “decided to stop making payments on behalf of the university and subsequently relieved employees from having to make contributions as well.” This continued for 20 years. Only during the Great Recession, when university officials found themselves in a deep fiscal hole, did they decide to ramp up pension contributions.

The UC pension fund remains awash in red ink. According to a new reportby Californians for Common Sense, over the past five years “the annual amounts required to fund [UC’s] retirement plans have more than doubled from $1.4 billion to $3.7 billion. The UC system has already borrowed $2.7 billion to help pay down its pension debt.” What’s more, the regents haven’t addressed UC’s unfunded health-care liabilities. As Californians for Common Sense points out: “The university’s retiree healthcare contributions are expected to more than double over the next decade, growing from $363 million in 2014 to $805 million in 2024.” University officials argue that such liabilities are not vested, meaning they can be cut at any time. That may be true, but the university has neither the interest nor the will to take such a dramatic course right now.

Failing to rein in retirees’ pension and health-care benefits only foists more long-term debt onto students. In a November 14 letter to undergraduates, university officials tried to sound a reassuring note: “[I]f tuition does increase, financial aid resources are expected to increase, too.” In reality, easy student financial aid is what drives university profligacy. Look no further than the construction of lavish new dormitories, the massive expansion of campus bureaucracies, and the millions of dollars expended on what City Journal’s Heather Mac Donald rightly describes as “mindless diversity programs.” And contrary to complaints from Napolitano and other university boosters about the state’s “disinvestment” in higher education, taxpayers between 2008 and 2012 contributed an additional $400 million to the CalGrant program, which helps students offset those rising tuition costs. So it’s easy for the university to spend money in the belief that students and taxpayers will keep footing the bill.

That belief won’t hold true forever. Universities are facing unexpected market pressures. As Ohio University economists Richard Vedder and Christopher Denhart argued in the Wall Street Journal, many universities—not just the University of California—face declining demand given students’ growing debt loads and diminished job prospects. That, combined with low-cost online offerings, could lead to some “creative destruction” in higher education. With all the new competition, Vedder and Denhart write, “Excessive spending on administrative staffs, professorial tenure, and other expensive accoutrements must be put on the chopping block.”

Napolitano appears unready and unwilling to hear such sobering advice. But given the pushback by UC students and top elected officials, the bloated University of California system might have to consider those options sooner rather than later.

This article was originally published by City Journal.

Steven Greenhut is the California columnist for U-T San Diego. Write to him at steven.greenhut@utsandiego.com.

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