University of California

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

Filed Under: Top Stories Tagged With: education, Janet Napolitano, Jerry Brown, Tuition, UC, UC System, University of California

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

Filed Under: Top Stories Tagged With: Janet Napolitano, UC, UC System, UCLA, University of California

Committee Hearing Exposes UC’s Bloated Budget

February 27, 2015 By Dave Roberts 3 Comments

Tuition hikes marched to the head of the class at a recent hearing of California Assembly Budget Subcommittee No. 2 on Education Finance. Assembly members balked at a 28 percent tuition hike advanced by UC President Janet Napolitano and approved by the University of California Board of Regents.

According to the Los Angeles Times, “Neither the governor nor the California Legislature has the authority to force the UC regents to rescind the tuition increase.” However, the tuition hike is not included in the January budget proposal of Gov. Jerry Brown, himself also a regent, for fiscal year 2015-16, which begins on July 1.

Chaired by Assemblyman Kevin McCarty, D-Sacramento, the hearing flunked the UC system for wasteful and deceptive spending practices. A video of the hearing is here.

UC’s overall spending has grown by 40 percent to $26.9 billion since 2007, according to a report prepared for the Feb. 18 meeting. UC’s expenditures for instruction grew by 27 percent to $6.9 billion.

Yet during that same period:

Undergraduate enrollment by California residents increased just 4 percent.
Overall enrollment, including graduate and out-of-state students, increased 15 percent to more than 248,000 students.
Inflation increased about 12 percent.
The Higher Education Price Index, which measures the costs of goods and services typically purchased by U.S. colleges, increased about 18 percent.

Tuition increase

To help pay for UC’s spending increase, tuition increased 84 percent between 2007 and 2011. In Nov. 2014, the UC Board of Regents increased tuition and fees an additional 5 percent annually over the next five years to $15,564 from the current $12,192, pending legislative approval. The compounded increase is 28 percent.

Much of that tuition is supported by state taxpayers in the form of Cal Grants, which have increased from $295 million in 2007 to $882 million currently.

Some of the biggest cost drivers are employee salaries and benefits, retiree benefits and an increase in the hiring of administrators, according to the report:

“The number of highly paid UC employees has grown significantly. Nearly 6,000 UC employees earn gross pay of $200,000 or more. [T]he number of these employees has grown by almost 100 percent during that period, and overall pay to this group amounted to $1.8 billion in 2013.
“[A]dministrative staff, both in academics and other areas, grew far faster than faculty and faster than overall staff growth.” Tenure-track faculty increased just 3 percent from 2007-14, while senior management ballooned 32 percent and academic administrators grew by 19 percent.
UC believes its faculty members are underpaid in comparison with other universities. On average, UC’s full professors receive $150,455, associate professors make $98,804 and assistant professors get $91,155.
Pension benefits for more than 61,700 retirees and survivors total about $1.3 billion in the current year.
Employee health care costs grew between 8 percent and 11 percent annually from 2007 to 2012. Cost increases have slowed since then, but are expected to rise 6 percent this year. In addition, UC spent more than $263 million on retiree health benefits in 2014. The current unfunded liability for retiree health care is $14 billion.

The UC spending boost, tuition hikes and requests for more state government funding have created pushback in Sacramento.Gov. Jerry Brown and Assembly Speaker Toni Atkins, D-San Diego, are both UC regents and voted against the tuition hikes in November.

Brown has offered a 4 percent increase ($119.5 million) in General Fund support for UC. But only if there is no tuition hike, out-of-state enrollment doesn’t increase and UC begins to rein in costs. Brown and UC President Janet Napolitano have been meeting to work out their differences, with a report expected at the UC Board of Regents‘ meeting March 17-19.

Focus on students

At the start of the subcommittee hearing, Atkins emphasized the need for UC to get its spending in order.

“I announced in December that we would be looking at every aspect of the University of California’s budget,” Atkins said. “Every dollar appropriated [should be] spent for the intended purpose and in the right way. We will have open public hearings that are student-focused, looking at how much it really costs to educate students at UC and how we maximize UC’s acceptance of California students. No Californian should be priced out of UC.

“The state must do our best to make higher education a top budget priority. UC must do its part and become more efficient, enroll more Californians and not place increases on the backs of California students. Today marks the start of an overdue journey – a journey that will continue throughout the budget process for as long as it takes.”

Most of the testimony from witnesses at the meeting, with the exception of the UC representative, contended UC is not spending its money wisely or transparently. Paul Golaszewski, principal fiscal and policy analyst at the Legislative Analyst’s Office, led off by taking issue with UC’s contention that its professors are underpaid.

“We looked at data on faculty recruitment and retention over a number of years and concluded that it appeared that at the salary levels and the compensation levels they were offering, they had a very low turnover rate for faculty, something like 2 percent a year,” Golaszewski said. “It appeared that they were still able to get the types of faculty that they needed.”

He told the committee that it’s hard to know exactly what UC professors are doing to earn their salaries.

“Faculty workload data is much more difficult to come by,” he said. “We do have data on the student-to-faculty ratio. But that’s not telling you how much faculty are teaching. The University doesn’t track that data, the federal government doesn’t track that data. So that’s an area you might want to drill down and get a better understanding moving on.”

Undergraduates

Charles Schwartz, a retired UC Berkeley physics professor, has spent years analyzing and critiquing UC’s budgeting practices. His analysis concludes that UC spends an average of $7,500 per student on undergraduate instruction.

“They are charging undergraduates [tuition that is] almost twice what it actually costs them to provide undergraduate education,” said Schwartz. “That doesn’t sound right. What we face here is not just a UC habit of bad accounting, but a longstanding disease that infects all universities in this country. And this grossly distorts any discussion about student tuition, which is a big thing. People talk about it, but nobody says the truth about what’s going on.

“If you do not acknowledge the cost of that, and go about hiding that cost on the tuition bills of undergrads, this is not right. The challenge I bring to you is what can be done about it. The first thing you have to do must be to resolve the conflict between what I say about UC’s cost structure and what the president’s [Napolitano’s] office says it is. You need to find out which one of us is to be believed.”

AFSCME research director

Claudia Preparata, research director for American Federation of State, County and Municipal Employees, Local 3299, accused UC of having bloated management and hiding its cost. AFSCME represents 22,000 workers at UC campuses and medical centers.

“While we support more state investment, it needs to be tied to improved transparency and accountability for how UC spends its money,” said Preparata. “This is particularly true for UC executive compensation and the growth of middle management, both of which have come at a real cost to our employees, students and taxpayers. The lack of transparency obscures a redirection of money that used to fund instruction and other student services to [now] increasingly funding six- to seven-figure salaries and a growing army of middle managers.

“The numbers speak for themselves. In 2008 just 293 UC employees received gross pay in excess of $400,000 at a total cost of just $160 million. By 2013, after years of budget cuts and tuition hikes, 793 employees received these paychecks at a total cost of $452 million. During the same time period the cost of extra perks that 250 of UC’s highest paid employees receive – including housing, car allowances, moving costs and cash bonuses – swelled from $17 million to $24 million per year.

“We welcome the Legislature’s increased scrutiny of UC spending alongside a reinvestment in higher education. We believe the scrutiny should not be limited to the explosion of executive compensation, middle management, but also extend to policy directives that have paved the way for decentralizing financial decision making, eliminating transparency and enabling campus administrators to squander scarce resources, including outsourcing of UC career jobs to the lowest bidder with no accountability.”

‘Complex budget’

“It’s a very, very complex budget,” said Nathan Brostrom, the UC executive vice chancellor-chief financial officer. He believes UC has been a good steward of its funds. He described how UC has improved its pension system, which had been neglected during the financial crisis.

“First, we started contributions and dramatically increased them,” Brostrom said. “In 2009-10 we contributed zero as a university. This last year we contributed $1.3 billion – 14 percent of our employer contributions. That also couples with 8 percent from each employee. Second, we introduced a new pension tier, which increased the retirement age from 50 to 55 and the maximum age factor from 60 to 65. Finally, we also undertook internal borrowing, $2.7 billion, which has helped leverage and shore up the pension system.

“As a result, we have achieved some good results. We are now 87 percent funded, up from the mid-70s just a couple years ago. But we are bearing this entirely on our own. We don’t get any funding from the state for it, unlike any other state agency or the Cal State system.”

Aggressive efforts have also been taken to rein in health-benefit costs, he said. A new system called UC Care “is centered around our own medical centers to curb the costs and keep it in house,” he said. “We also undertook family member eligibility verification. As a result, we were able to contain the costs to 2.3 percent last year and 5 percent this year. And we are forecasting a 5 percent annual increase going forward.”

UC is also ensuring the continuation of in-state enrollment growth of 1 percent per year, or about 2,200 students, at a cost of about $22 million annually, said Brostrom.

Student-faculty ratio

One area that the UC has fallen behind in, due to a lack of funding, is the student-faculty ratio, he said. The ratio has increased to 21:1 from about 19:1 a decade ago.

“We really have not been hiring to replace the faculty members who are either leaving or retiring,” he said. “So there’s a fairly sizable amount that needs to go into new faculty hires. We also want to reinvest in instructional infrastructure, classroom technology and other instructional equipment.”

Brostrom concluded his presentation on an upbeat note. “Something we are most proud of is we are a world class university with very hard working, high achieving students, but we remain accessible to all Californians,” he said. “That’s something we not only maintained but enhanced during the budget crisis.”

Asked about the progress of Brown and Napolitano’s committee meetings, Brostrom said, “It’s been a very constructive process. We’ve been able to hear from experts both within the university and across higher education on different models and ideas. I think there will be things that will be constructive and helpful for the university to serve more Californians. Things that may help us reduce the time to [complete a] degree or increase streamlining of transfers. They may not all lead to cost reductions, but will provide more access to UC for all Californians.”

During the public comments portion of the meeting, numerous students complained about the high cost of tuition. They said it’s forced some students to become homeless, skip meals or work longer hours at a job, shortchanging their studies.

The subcommittee’s next hearing in early March will go into more detail on the UC budget, said committee Chairman McCarty.

Originally published by CalWatchdog.com

Filed Under: Top Stories Tagged With: budget, Janet Napolitano, Jerry Brown, Kevin McCarty, UC System, University of California

UC Berkeley Slammed Over Allegedly Biased Minimum Wage Report

February 23, 2015 By Connor D. Wolf 3 Comments

A top researcher has called out University of California, Berkeley for allegedly releasing a biased research paper that served as leverage for the San Francisco minimum wage increase.

Economic expert Michael Saltsman, research director at the Employment Policies Institute, argues that a biased research paper by UC Berkeley helped lead residents of San Francisco to support a rapid minimum wage increase, which possibly contributed to several businesses closing. As Saltsman argues, the wage increase makes the cost of operations a much worse burden for business owners. They often have to cut hours or even in some instances completely close their business.

The paper, “San Francisco’s Proposed City Minimum Wage Law: A Prospective Impact Study,” was released in August, and argued that an increase of the minimum wage will have a vastly positive impact for workers in the city.

“Drawing on a variety of government data sources, we estimate that 140,000 workers would benefit from the proposed minimum wage law, with the average worker earning an additional $2,800 a year (once the law is fully implemented),” the study noted. “Our analysis of the existing economic research literature suggests that businesses will adjust to modest increases in operating costs mainly through reduced employee turnover costs, improved work performance, and a small, one-time increase in restaurant prices.”

The following November, residents of the city voted to increase the minimum wage gradually to $15 an hour over the course of three years. Saltsman argued the UC Berkeley study used biased findings.

“These are the comforting studies they can turn to,” Saltsman told The Daily Caller News Foundation. “It creates stories that say you can raise the minimum wage without consequences.”

“If you look at the methodology,” Saltsman said. “Basically they didn’t take into account the fact it could have a negative impact on employment.”

Saltsman argued that the study only looked at how the wage increase will benefit workers, as opposed to how it may negatively impact businesses. If a business owner is unable to hire as many employees or has to close their business because of the higher cost of operations, it becomes bad for workers, too.

“These contribute to the public policy debate,” Saltsman continued. “It’s become a key position in the public policy debate.”

Saltsman said their approach and the results of the study are not at all surprising. Some of the researchers involved had activist backgrounds.

“The problem at UC Berkeley is they are presenting themselves as unbiased economists,” Saltsman notes. “This is the sort of thing you expect from an advocacy group.”

Michael Reich, one of the researchers involved in the report, shot back at the claims the study was biased.

“In restaurants and retail, stores both open and close all the time. You’d need to know whether closings increased and openings decreased relative to a control group,” Reich told TheDCNF. “That’s an objective method that all economists, including me, use to identify the causal effects of a policy.”

Though the wage increase has not gone into full effect yet, opponents are already pointing to several businesses that have closed. These include Borderlands bookstore, Abbot’s Cellar, Luna Park and Source.

Follow Connor on Twitter

Originally published by the Daily Caller News Foundation.

Filed Under: Top Stories Tagged With: Berkeley, Daily Caller, Michael Saltsman, Minimum Wage, san francisco, University of California

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

Filed Under: Top Stories Tagged With: Chris Reed, Jerry Brown, Napolitano, UC, University of California

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

Filed Under: Top Stories Tagged With: budget, education, Jerry Brown, UC, University of California

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

Filed Under: Top Stories Tagged With: education, Gov. Brown, Jerry Brown, Legislature, UC, University of California

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.

Filed Under: Top Stories Tagged With: Janet Napolitano, Tuition, UC, University of California