After weathering unprecedented criticism for its revenue-driven admissions policies, the University of California system has appeared to shift officials’ opinion back in its favor, unveiling a modest but symbolic uptick in admissions for in-state students — with an emphasis on certain racial and ethnic minorities.  

The increase in admitted in-staters was broadly distributed, but did not accompany a rollback in a parallel trend — amped up out-of-state enrollment — that had rankled advocates of greater in-state admissions. “Each of UC’s nine undergraduate campuses also admitted more freshmen and transfer applicants for enrollment this fall,” according to the San Francisco Chronicle. “At the same time, UC continued its practice of increasing admissions to out-of-state freshman, who receive no tuition break and pay about three times the tuition that Californians pay.” The schools also allocated $3 million for student food aid, responding to a survey conducted in spring 2015 that suggested some “42 percent of UC students struggled with poor quality food and insufficient sustenance in the past year,” reported UC Santa Barbara’s Daily Nexus.

Turning a corner

The changes arose from a long-in-the-works deal, hammered out between University of California President Janet Napolitano and Gov. Jerry Brown, granting the UCs “an additional $25 million in exchange for enrolling roughly 5,000 more California freshmen this fall than last fall,” the Chronicle reported. “In-state tuition will also remain at a flat $12,192 for the fifth straight year, but will rise in 2017 at the rate of inflation.”

The in-state admissions boost appeared to serve a dual purpose, also keeping critics of a different kind at bay. Included in the incoming class are “the most African Americans and Latinos since voters banned affirmative action two decades ago,” the Los Angeles Times reported, calling the outcome “progress that is likely to ease pressure from state legislators to boost diversity at UC’s most elite campuses.”

“Critics have complained that non-Californians have seemed to edge out equally or more qualified state residents at UCLA and Berkeley, with African Americans and Latinos disproportionately admitted to less competitive campuses at UC Merced and Riverside.”

A complex game

Gathering outrage among Californians regardless of party led to support in Sacramento for a bipartisan inquiry and a sweeping audit. Its results “reinforced what many California parents already suspected: On a constant hunt for more revenue, the prestigious University of California system gave favorable admissions treatment to thousands of higher-paying out-of-state and foreign students, to the detriment of Californians,” as the New York Times recalled.

Auditors reported that “the university had tripled its population of nonresident undergraduate students, reducing the percentage of resident applicants it admitted to 62 percent from 77 percent, while increasing the percentage of nonresidents it admitted to 56 percent from 48 percent,” the Times noted separately. “The nonresidents included thousands of students who were less qualified than admitted Californians, the audit said.”

Instead of provoking a deeper crisis, however, the harsh news cleared the way for a remarkably rapid settlement. Notably, Assemblyman Mike Gipson, D-Carson, “the legislator who requested the audit — and castigated UC on the results — welcomed the new admissions numbers,” the Los Angeles Times observed. There were hints that legislators — especially Democrats — were eager to declare victory during an election year with an unusually populist flavor on both sides of the political spectrum. California tuition had briefly but prominently become a wedge issue in the national Democratic primary for the party’s presidential nomination. With the perception gathering that Golden State discontent was a canary in the coal mine amid a “broader, fundamental breakdown in the traditional operation of the public university,” the UC saga supplied “much of the impetus behind the announcement by Hillary Clinton […] that she was embracing a large part of Bernie Sanders’s proposal to provide free tuition at in-state public colleges,” according to the New York Times. 

Berkeley chancellor Nicholas Dirks said “the university had a ‘substantial and growing’ deficit that could threaten its long-term stability,” according to the New York Times, “and that it needed to reduce expenses and raise revenues to maintain its position as a premier public institution.”

Dirks indicated that a new committee would “develop proposals to address the $150 million deficit, or about 6 percent of Berkeley’s $2.4 billion budget, including looking at reducing staff, particularly in administration, and using online courses, real estate and branding to bring in new revenue,” the paper added.

A broader problem

The embarrassing revelations reverberated nationally amid an ongoing debate over the value of a college education in today’s cultural and economic situation. But in California, where Gov. Jerry Brown had entered into a protracted and at times acrimonious debate with UC president Janet Napolitano, news of Berkeley’s massive shortfall led observers to speculate whether the delicately negotiated agreement the two power players finally settled on would hold. Napolitano swiftly announced her support for Dirks’ plan, the Times reported, “while Mr. Brown declined to comment on it.”

Berkeley’s woes have come to epitomize the difficult situations colleges often find — or place — themselves in. “One of the campus’s primary sources of revenue — tuition and fees — has been frozen for undergraduate students for the last five years,” the Daily Californian noted, obliquely referencing the negotiated plan to keep UC tuition at current rates for in-state students through the 2017-2018 school year. “Meanwhile, inflation continues to inch upward, and costs beyond the university’s control have continued to rise, all in the context of an era of public disinvestment, according to campus sources.”

Sacred cows

The crisis has turned out to be so bad that the campus’s athletic programs could wind up on the chopping block. “Even Cal Athletics, which many perceive to be the campus’s biggest revenue generator, will not escape budgetary review,” added the Daily Californian. “Intercollegiate Athletics has run a deficit in recent years, with even more strain put on its pocketbooks by debt obligation — about $18.1 million annually until 2032 — accumulated after upgrading Memorial Stadium.”

Campuses across the country have come under fire in recent years as critics have questioned the impact of lavish facilities, prized sports teams, and ballooning administrative staff on tuition costs. At the same time, state support for schools in states like California has decreased. “The amount of money the state gave the University of California, as measured per student, fell from $16,000 in 2007-08, before the recession, to $10,000 in 2011-12,” the Los Angeles Times reported. “Meanwhile, tuition more than doubled between 2002 and 2012, according to a 2014 analysis by the Public Policy Institute of California.”

In an effort to stave off another mutiny among alumni, Dirks “ruled out eliminating any teams,” according to the San Francisco Chronicle — “a subject of sensitivity in the past. When the university tried to cut the men’s baseball team in 2011, it prompted an uproar among alumni who eventually helped raise enough money to rescue it.”

Teams weren’t the only special groups taken off the chopping block. Although Dirks has insisted that “every aspect of Berkeley’s operations and organizational structure will be under consideration,” the Chronicle noted, he conceded in a recent news conference that “we’re not laying off faculty.”

In the red

To stay afloat, UC Berkeley has resorted to a supervised emergency bailout, with strings attached, from the UC system as a whole. The campus will “receive at least $200 million in loans and debt restructuring from University of California headquarters,” the Chronicle reported, “and will spend the next several months working with UC officials, faculty and the campus’ fundraising foundation to identify cuts and brainstorm ways to attract more cash.”

Plans have already been in the works sketching out exactly what that months-long process will entail. “Berkeley will scrutinize its entire workforce, redesign some academic programs, step up fundraising, expand online course offerings and take other steps to cut costs and increase revenue,” according to the Los Angeles Times.

Under the hard-fought agreement, the UCs receive “a 4 percent general-fund spending increase and a large contribution toward its underfunded pension system,” as U-T San Diego’s Steven Greenhut observed. In a sign of their priorities, officials proceeded to increase executive compensation by 3 percent — topping out at $991,000 for the best-compensated, according to Greenhut, with a net price tag of $14 million per year.

Gov. Jerry Brown had labored to keep education spending under relative control. In January, he touched off protracted negotiations after offering the UCs nearly $100 million less than they’d sought.

More international

In one concession to Brown, the UCs put a two-year freeze on tuition for California residents. But the agreement allowed hikes for nonresident tuition as high as 8 percent a year. And as the talks wore on, administrators had already doubled down on that kind of approach in order to draw in more income. Over the past several years, the UCs have orchestrated an influx of high-paying foreign enrollees. Describing international students as a “cash cow for the system,” the San Francisco Chronicle noted that the percentage of California residents making up the UC student body dropped by almost 10 percent over the past eight years. “Meanwhile, international enrollment increased nearly fivefold over the same period, from 1.8 percent to 8.5 percent of the student body.

The number of domestic out-of-state students grew by just under two percentage points. “This year,” added the Chronicle, “an even higher percentage will be coming from overseas and across state lines. Non-resident admissions for the fall semester increased by about 13 percent UC-wide, with Santa Cruz, San Diego, Irvine and Davis experiencing particularly large jumps.”

Top dollar

Critics have questioned why so much UC revenue has flowed toward salaries. Last year, when the board of regents hiked salaries for university chancellors, objections to the sometimes eye-popping figures were met with warnings that the UCs risked brain drain at the hands of out-of-state competitors.

“At first I was concerned about how this will look to the general public,” compensation committee member Bonnie Reiss told the Chronicle. “But she said she changed her mind after recalling that UC Irvine lost its chancellor, Michael Drake, last year when he quit to run Ohio State University, where the base pay was $851,303, the nation’s highest for a public university.”

Although university leaders have countered that high salaries are essential to attracting and retaining competitive talent, some compensation packages have been so generous that observers have suggested some other motive is at work.

The case of Mark Yudof, Napolitano’s predecessor, has attracted special attention. Citing custom and precedent, the board of regents justified paying Yudof $591,000 the year after he left the UC presidency and geared up to return, albeit briefly, to a professorship.

Although some legislators responded to the controversy by trying to limit UC payouts, those efforts have come to naught. As the Sacramento Bee reported, “Assemblyman Roger Hernández, D-Baldwin Park, introduced a bill shortly afterward that would have capped compensation for any UC employee at $500,000. That bill is stalled in committee; it last came to a vote in April.”

Last year, out of some 200,000 jobs systemwide, 28 were paid at least $1 million, 35 grossed $500,000 or more, and over 3,000 received salaries in excess of $100,000, according to data reported by the Orange County Register.

Minimum wage battle

Adding to the friction between the UCs and the Brown administration, Napolitano recently announced that “several thousand workers would have their salaries increased to $15 an hour by 2017,” according to the Los Angeles Times. Although Brown declined comment through a spokeswoman, the Times noted that his finance department came out swinging last month against the latest bill angling to increase minimum wages statewide. “Officials said the wage hike would increase costs to state agencies by $393 million this year, nearly $1 billion next year and $3.4 billion the year after, with about half coming from the state general fund,” the Times reported.

source: Tax filings

While families struggle to help students with tuition — and as student loan debt skyrockets — California universities continue to amass multimillion- and even billion-dollar endowments.

Endowments at the state university system schools have seen massive increases since 2009, even as in-state tuition at University of California has doubled in the last decade to $12,192 and the average student loan balance tops out in California at $20,340 per student as of 2013.

Most universities point to dwindling state support as justification for tuition hikes. But most also ignore, or fail to mention, the increases in their endowments, a considerable pot of money that for some colleges boosts their assets into the billions of dollars.

“We need to be forcing these institutions to spend more of that money in financial aid,” said José Luis Santos, vice president of higher education policy and practice at the Higher Education Trust, a Washington, D.C.-based group that advocates for better higher education opportunities for students.

The University of California at Berkeley’s nonprofit endowment arm reported a fund balance of $1.3 billion at the end of fiscal year 2013, the last year for which numbers are available.

That figure represents a 73 percent increase over the school’s endowment balance of $779.7 million in 2009. The fund supports “academic research for the students, employees and faculty of the University of California Berkeley,” according to the fund’s tax form 990.

The endowment for the University of California at San Diego grew 53 percent from $299.8 million in 2009 to $460 million in 2013.

At UCLA, the endowment balance increased 65 percent over the four-year period. UC San Francisco’s fund topped them all in terms of growth, ballooning 84 percent.

Over the same four-year period, UC in-state tuition increased 71 percent.

Endowments are used as investment resources, but the spending of the yield is dictated by fund policy, which can vary. Donors can, and often do, specify use as well, such as attracting professors with certain specialties or for particular research.

Santos disputes the claims of colleges who say they are hamstrung by contingencies and conditions on many endowment donations. They also contend that they cannot spend more than a specified percentage of their endowment, saving much of it for investment and future growth.

Even a small increase in spending can be significant, though, given the size of the endowment funds. The four schools CalWatchdog examined had a combined fund balance of $4 billion at the end of the 2013 fiscal year. One-tenth of one percent of that balance is enough money to cover full tuition for 329 students.

source: University of California

“Universities will tell you their hands are tied,” Santos said. “The question is, ‘Who sets these percentages?’ No one is governing these endowments other than themselves.”

Meanwhile, the salaries of administrators and top educators and researchers have skyrocketed, a fact that has not gone unnoticed by California lawmakers. Assembly Bill 837 would cap UC system salaries at the half-million-dollar mark.

From a legislative analysis of the bill introduced by Assemblyman Roger Hernández (D, West Covina):

According to the author, “the UC’s stance on increasing student tuition while at the same time continuing to pay its staff over half a million dollars is disturbing.

In 2013 calendar year, 387 employees made over $500,000 in total annual salary, with 29 others earning more than $1,000,000 per year.

In contrast, the remainder of the 268,442 UC employees earns an average annual wage of $43,520. According to AFSCME, the total UC spending increased by 40% during the 2007-2013 timeframe, while spending on UC’s richest employees increased  by 270% during the same timeframe.

When UC trustees voted 14-7 to increase tuition last fall, UC President Janet Napolitano said the rate hike was needed.

According to Napolitano, UC needs that 4% plus up to 5% more tuition each year for five years, or its equivalent from the state, to afford higher payroll and retirement costs, hire more faculty and enroll 5,000 more California undergraduates over five years. A third of the tuition money will go toward financial aid.

According to figures in a March bond issuance filing, the state has increased funding to UC by 31 percent since 2011-12, from more than $2.2 billion to more than $2.9 billion in the 2014-15 budget.

The new budget would increase the UC budget by 4 percent, contingent on no tuition increase.

UC is the state’s junior university system with 10 schools compared to California State University’s 23. But it has for years endured criticism for its generous payroll. Both systems are regulated in terms of payroll by the state assembly, which occasionally enlists measures to prevent outlandish pay.

The measures, though, have not always been successful. In the 2009-10 session, Gov. Arnold Schwarzenegger vetoed a measure that would have prevented executives in the UC system from getting a raise in years when the system’s budget was either kept the same or cut.

A measure last session would have required the California State University system to freeze undergraduate tuition and fees through 2016-17.  But according to the bill, which also inserted language to “request” the UC system do the same, the freeze was contingent on increases in state general fund support.

The bill died in committee.

Students here also are protesting the proposed hike in tuition at the University of California advanced by President Janet Napolitano. Reported the Times:

In Berkeley, scores of students and community members marched through the city and continued to occupy Wheeler Hall. At UCLA, several dozen students rallied in front of Powell Library. And dozens of protesters at UC Irvine staged a sit-in at the dean of students office, demanding an audience with the university’s chancellor.

The tuition increases — up to 5% each year over the next five years — would raise costs next school year as much as $12,804 and as high as $15,564 by the 2019-20 school year. Protests began last week, when UC regents voted to raise tuition unless more state funding is provided.

Shades of the Sixties. The next thing you know, the Rolling Stones will throw another free concert at Altamont.

Then it was the draft Now it’s exorbitant tuition.

Except this time, the kids also have run up massive debt.

Let’s hope the kids push for reductions in the absurdly high levels of administration — now more than one administrator for each professor. That would cut costs and preclude the tuition hikes.

On the positive side, kids again are getting a hard lesson in the tyranny of governments, especially those that say they “help” us.

By John Hrabe

Congratulations or condolences?

It’s hard to say which is more appropriate for Timothy P. White, the newly appointed Chancellor of the California State University system. White takes over the top job at the country’s largest and perhaps most beleaguered public university system. Over recent years, Cal State has been fraught with controversies involving its executive compensation policies, state budget cuts and an endless series of tuition hikes.

In the press announcement of White’s hiring, CSU Board Chair Bob Linscheid said, “Tim White’s background and experience reflect the institutional values and mission of the CSU.” Institutional values? Linscheid should have just called the new chancellor a company man, who will do whatever it takes to protect and preserve the Cal State institution.

Now — more than ever — Cal State needs someone who isn’t a bureaucratic insider. The unimaginative educrats in the Cal State Chancellor’s office only see two options: increase revenue or cut spending. Since Cal State administrators aren’t about to give up their lucrative benefits, they’ve engaged in an unabashed and illegal campaign for Gov. Jerry Brown’s multi-billion dollar tax increase, Proposition 30.

“With slightly more than one month remaining until the November election, CSU campuses are hosting a variety of informational events detailing the impact of Proposition 30 on campuses and the university system as well as voter registration drives,” Cal State explained in a recent government-sponsored press release. “The 2012-13 California state budget includes a mid-year ‘trigger’ cut tied to Proposition 30 and if the measure is not approved by voters, the CSU budget will be cut by $250 million.”

The Howard Jarvis Taxpayers Association has fought back against Cal State’s blatant campaigning. HJTA president Jon Coupal told ABC News last month, “When they specifically reference Prop. 30 and the revenue that it would provide, then they’ve crossed the line.”

Coupal is right, but that doesn’t mean anyone should be surprised by Cal State’s actions. Cal State and its new chancellor are stuck in the old structure. In response to 2009 budget cuts, White told the Inland Valley Daily Bulletin, “The Regents action to raise fees was the ‘least lousy’ alternative in front of UC. Because the state is providing insufficient funding for UC, raising fees was the only choice left to help maintain the high quality programs Californians deserve and expect.”

Two years later, White’s response hadn’t changed much. “You’re not only cutting access. You’re also cutting out the seed corn of tomorrow’s innovations,” he told the San Bernardino County Sun as a part of an education summit to “drum up support for a special election and an extension of current tax rates.”

Earlier this year, then-UC Riverside Chancellor White told the New York Times, “I’d be lying if I said what we offer students hasn’t been changed and that there hasn’t been a degradation of the learning environment.”

Structural deficit

Even if Prop. 30 passes, it’s a temporary fix for Cal State. That’s because Cal State’s structural budget can’t cope with incremental institutional cost increases. Pensions, health care and energy costs are all up at Cal State. Meanwhile, state support of higher education, like every other budget item, is down.

To underscore this point, CalWatchDog.com has reviewed more than three decades of budget, enrollment and tuition data to evaluate the biggest claims in higher education. Cal State administrators say that state support of higher education is down. Taxpayer groups point to extravagant executive compensation for top administrators. Faculty members claim that their pay and benefits are static. Students complain that their tuition bills have skyrocketed. Parents argue that their tax dollars are funding more foreign and out-of-state students to boost revenue.

Who’s right? Everyone. And that’s exactly the problem. The institution is broken.

State Legislators Have Approved Record Budget Cuts to Cal State

In the past decade, there has been a fundamental shift in how taxpayers and students split the bill for a Cal State education. In 2000-01, the state spent more than $2.47 billion in general fund expenditures on the Cal State system, while student fees accounted for $482 million dollars of the overall budget. In 2012, the state’s general fund contribution fell to $2.01 billion, and student fees have risen to $1.593 billion— a 230 percent increase in a little more than a decade.

In 1999-2000, the average full-time equivalent Cal State student paid just 20.3 percent of the cost of his education. Nearly three-quarters of the bill was paid by state taxpayers, with the remaining 5.6 percent picked up by other sources.  In 2010-11, the average full-time equivalent Cal State student paid 37 percent of his total education costs. The state’s portion fell to 55 percent.

According to a January 2012 report by the state’s independent Legislative Analyst’s Office, “recent tuition increases and state funding cuts” could raise the Cal State students’ share to 46 percent. However, the LAO also points out, “Because they do not account for facilities costs, these figures actually over-state the share students pay. Facilities costs, which are difficult to calculate, can add roughly 20 percent to the annual cost of education.”

Who should pay what? There’s plenty of room to debate how the bill should be split. But, it’s clear that the financial burden has changed dramatically in the past decade.

Cal State Tuition Has Skyrocketed

Following with the shift in overall state budget funding, tuition has skyrocketed for Cal State students. In less than eight years, tuition has risen 150 percent, from $2,334 per year in 2004 to just under $6,000 this fall. In just the past two years, the cost of attendance for a Cal State student living off campus has increased by $2,602 — from $23,712 to $26,314.  Tuition represents 83 percent of these increased education costs.

According to the LAO, not all students pay these higher tuition bills.  “Nearly half of all undergraduates at California’s public colleges and universities receive grants or waivers that fully cover education fees,” the LAO explained in a report titled, “Higher Education: Answers to Frequently Asked Questions.”

Don’t forget that student tuition and fees are tax-deductible thanks to the American Opportunity Tax Credit, which is worth up to $2,500 per year in federal tax credits per student. Again, the LAO says that tax credit helps “39 percent of CSU families (who) received about $270 million from this credit in 2009, averaging close to $2,000 per student.”

Cal State President and Top Administrators Have Enjoyed Lavish Perks and High Salaries

CalWatchDog.com has provided extensive coverage of Cal State’s excessive presidential pay and benefits. The average base salary of the state’s 23 college presidents is just under $300,000 per year, a figure that does not include other widely reported benefits such as a car allowance, bonuses paid by tax-exempt college foundations and free housing.  Cal State presidents receive perks and benefits worth as much as 50 percent of their base salaries, or more than $145,000 per year.

According to an analysis of payroll data by the California Faculty Association, Cal State presidents awarded 486 pay raises to top managers from 2008-10. Cal State Chancellor Charles Reed handed out another 80 pay raises to his chosen bureaucratic elite.  Those figures excluded promotions for staff that have internally changed positions. “On an annualized basis, these discretionary raises added $6.5 million to the cost to run the CSU system,” the study concluded.

Foreign and Out-of-State Students Fill More Slots at Cal State Universities

In 1975, Cal State admitted 391 foreign students and 1,698 out-of-state residents. Combined, foreign and out-of-state students made up less than 1 percent of the entire student body. Last year, Cal State accepted 11,489 foreign students and 4,053 out-of-state residents, which combined to account for 3.6 percent of the student body.

The increase in the number of foreign students — from 391 to 11,489 — is a bit of a statistical exaggeration. In the early 1980s, foreign students represented roughly 3 percent of the student body, peaking in 1981 with 10,231 foreign students.

Regardless of which year you pick as the starting point, it is true that foreign and out-of-state residents account for a bigger portion of the student body. Since 1975, the average combined percentage of foreign and out-of-state students has been 2.94 percent.  In 2011, these groups accounted for 3.6 percent of the student body.

Increased Institutional Costs: Faculty Health Premiums Have Increased

The California Faculty Association, which represents 23,000 employees on the 23 campuses, recently ratified a new contract agreement. Employees didn’t receive pay raises, but they did preserve their health benefits. Many state agencies pay 80 percent of employee health plan premium costs. Cal State is a bit more generous and pays 95 percent of the bill.

Health care isn’t getting any cheaper. In 2011-12, Cal State spent an additional $36.4 million in health care premium increases. According to the Cal State budget analysis, “The total increase in CSU health care costs due to contribution changes during this five-year period is nearly $104.4 million.” And that money was to maintain the status quo. Employees didn’t get better health coverage or see their premiums decrease. Over the last five years, it’s cost more than $100 million more to keep things exactly as they are.

By Brian Calle

The following video explains why college tuition is so high in California.