My View II: The Pointless Tuition Hikes

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Governor Brown threatened to cut funding in response to UC fee hikes approved this week

In 2012, when the voters were asked to approve Proposition 30, it was students’ votes, promised that there would not be tuition hikes, that in part helped pushed the tax increase to victory. But now, barely two years later, the University of California Regents, over the vehement objections of Governor Jerry Brown, have approved fee increases of up to 5 percent a year for the next five years, starting next fall.

Governor Brown, say what you will about him, likes to keep his promises.

As the San Francisco Chronicle wrote on Wednesday, “As head of the U.S. Department of Homeland Security and governor of Arizona, Janet Napolitano has had her share of political fights — but as University of California president, she may have finally met her match in Gov. Jerry Brown.”

The governor did not mince words this week – if tuition goes up, UC can forget about getting extra money from the state.

“The governor has made it very clear that funding increases for UC are contingent on tuition remaining flat,” stated Brown press secretary Evan Westrup. Despite two new appointments this week, including former Speaker John Perez, Governor Brown lost the regents’ vote.

Lt. Governor Gavin Newsom, also a regent, slammed Ms. Napolitano, calling the tuition proposal “disrespectful to the governor” and “tactically naive.”

The question is now whether this is, in fact, a threat or a promise by Governor Brown. The LA Times reported on Friday, “Asked Thursday about the governor’s UC funding plans, his office said only that ‘next steps will be outlined’ in his January proposal for the 2015-16 state budget.”

Governor Brown previously stated that the four percent revenue increase would only continue if the tuition freeze continues. Ms. Napolitano counters that UC needs that four percent, plus another five percent more in tuition.

UC received $2.64 billion from the state this year which is $460 million less than seven years ago.

“I’m the president of the university and my job is to make the case for the university. So I’m very respectful of the governor. I disagree with him but I’m very respectful,” Ms. Napolitano said.

The move triggered Assembly Speaker Toni Atkins to issue a statement, “I am extremely disappointed the UC Regents voted to raise tuition and impose new burdens on middle class students and their families. There are other steps we can take to get UC the funding it needs. I offered an alternative that would prevent tuition increases, but unfortunately a majority of Regents dismissed them, just as they dismissed the concerns of the students who traveled to the meeting to comment. To UC students and their families, please know that the fight over this nearly 28% fee increase is not over. I will continue advancing my proposal to increase state funding for UC, reject fee increases, cut UC’s administrative costs, and ensure the University of California puts California students first.”

Speaker Atkins is a member of the UC Board of Regents and has proposed an alternative plan that would increase funding for the UC system without raising tuition. Speaker Atkins’ proposal includes the following items:

  • First, reject all fee increases for California students, including the nearly 28% fee increase in President Napolitano’s proposal.
  • Additional funding of $50 million from the state General Fund. The California State University system, which has not proposed raising fees, would also receive additional state funds to increase student services to reduce time to graduate, as well as to increase enrollment.
  • Increase Cal Grants to lessen the financial burden of higher education on lower income families.
  • Require UC to maintain all existing institutional aid to students to ensure the increased Cal Grant benefits are realized by the students.
  • Accelerate the implementation of the Middle Class Scholarship to cut fees for middle income families by more than 20% in 2015-16.
  • Double the proposed increase of California students to 10,000 over five years by adding enrollments of California students by 2,000 per year for five years and ensure California student enrollments increase at all UC campuses.
  • Cap enrollments of out-of-state students at 2014-15 levels. The Great Recession has ended, and funds have been restored to the UC, so the time has come to end the practice of backfilling state cuts with students that pay out of state tuition and push out California students.
  • Increase tuition for out of state students by $5,000, which is still well below other prominent public schools. The increased revenues will help fund enrollments of California students and keep California students’ fees from increasing.
  • UC should adopt the pension reforms for new employees contained in the Public Employees’ Pension Reform Act of 2013.
  • UC also needs to ensure Californians are getting the most for our money by increasing the amount of teaching that is required and limiting increases in executive compensation.

Students were quick to denounce the tuition increase, which triggered protests across the UC campuses. Unlike a few years ago, most of these protests were peaceful.

The question is why did UC choose to pick a fight with the governor and speaker of the assembly when their funding is directly tied to the decisions made by the legislature and governor? Increasing tuition by five percent but losing 4 percent in increases to state funding is not a good tradeoff.

“Seeing you all come in laughing and smiling and talking about stuff made me sick to my stomach,” UC Davis student Amelia Itnyre told the board through tears before the vote. “Students, we aren’t just angry, we are sad. You should be crying, you should be praying, you should be figuring out what you are going to do to fix this.”

“This is a plan that is integral not only to the stability, but also to the vitality, of the University of California,” Ms. Napolitano said. “While our commitment to cost-cutting continues, the plain fact is that tuition must now be back on the table,” she added.

So when the governor cuts their funding, are they going to go back to the regents to increase tuition again? And why didn’t they simply ask the governor to increase funding by more than the four percent?

This all seems pointless but one thing is clear – the people who will lose are going to be the students and the middle class in California who will see the cost of education go up… again.

—David M. Greenwald reporting

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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43 thoughts on “My View II: The Pointless Tuition Hikes”

    1. Don Shor

      The vote was 14 – 7. From the Enterprise: “The no votes were cast by Brown, Lt. Gov. Gavin Newsom, Assembly Speaker Toni Atkins, Superintendent of Public Instruction Tom Torlakson, Student Regent Sadia Saifuddin and two regents appointed by Brown this week — outgoing Assembly Speaker John Perez and Long Beach City College President Eloy Oakley.”

        1. Frankly

          And then I ask why now?  How long has the university been facing budget shortfalls?  Why hasn’t the university been pursuing aggressive cost cutting for the last decade or more?

          Soft money of government corrupts absolutely.

          And it is the old strategy of the education establishment to punish the kids with higher cost and crappier schools so that the kids protest and politicians go take even more money from the hard-working and cash-strapped families so that Janet Napolitano can be paid her near $1 million in total compensation every year.

          There is so much fat and waste in the UC system.  Voters need to raise total hell about this situation.  The state needs to cut off the UC system completely so it has to survive on its own.  I would take the money going to the UC system and provide means-tested vouchers to students instead… so that they can spend the money on any school they want to that admits them.

           

        2. South of Davis

          Don wrote:

          > Meanwhile, the governor has proposed the following agenda

          > item to establish a cost-cutting commission for UC

          I had to laugh that on the radio yesterday (just minutes after hearing a story about kids protesting the tuition hikes) that Janet Napolitano (who makes more than President Obama and Governor Jerry Brown COMBINED) said:

          “Ihe UC system will expand legal services to undocumented students at six campuses”

          http://www.kusi.com/story/27453886/six-uc-campuses-to-expand-legal-services-to-undocumented-students

          It is like reality had turned in to a story from the Onion where legal tax paying kids from California can’t get in to UC schools because they keep increasing both the number of illegal/undocumented students (and special programs to help them) and foreign/out of state students (and special programs to BOTH attract them and help them).

          I was recently talking to a white male UC Berkeley undergrad and he said that white males are only about 10% of the undergrads (when you back out the children of the politically connected, super rich, UC affiliated, or who’s Dad’s are in the Bohemian Club there are not many “regular” white guys at Cal any more)…

  1. TrueBlueDevil

    Adele de la Torre, the newer VC for Student Affairs, makes over $200,000 per year, and the talk I heard, she was a poor speaker and even her former students weren’t thrilled with her. I support Students Affairs, I just don’t see why we have to make that individual rich, and with the golden parachute retirement where a retiree like this could make $3, $4, $5 million in retirement. Why can’t we pay this position $80-100,000 per year?

    Look across the whole system and you will see spending like this.

    1. Frankly

      Absolutely.  It is a giant theft of public money that should be going to the students, but instead is buying lavish lifestyles of the new rich and famous… public sector workers.

        1. Frankly

          Not all.  But many.

          But I don’t blame them.  I blame the politicians and the voters that keep making excuses for why we need to keep supporting the status quo.

    2. TrueBlueDevil

      P.S. CNN just ran a new college special / college costs program, I think the title included “Ivory Tower(s). I caught 15 minutes, and it was very good, including wonderful footage of Harvard and such. But college costs have really exploded in the past 3 decades, far beyond the increases for food, housing, or any other industry.

  2. Frankly

    See here…

    http://www.bizjournals.com/sanfrancisco/news/2012/05/04/university-california-riverside-center.html?page=all

    The University of California will build a systemwide personnel and payroll service center for all 10 campuses and five medical schools at UC Riverside. It hopes to save $100 million a year, eventually, from the change.

    This was in 2012… many years into the budget problems and tuition increases.  $100 million per year!  How many other consolidation opportunities do you guess might exist that are being ignored?

    Here is the thing… managing and leading an organization to do more with less is hard work.  It is not as fun as it is building a bunch of new ego shrines to impress your peers.  We are all stupid to accept this posturing from UC brass that it is broke and needing to take more from the students.  They are just a bunch of lazy, pampered, over-compensated and ineffective executives.  What the UC system needs is a big shot of business best practices and to hell with the academics demanding that only academics run the show.

     

  3. Frankly

    Go here to explore the pay for all UC employees.

    https://ucannualwage.ucop.edu/wage/

    Note that UCD, including the Med Center, shows 40,047 employees in the database.   Note that 5,264 of these employees are paid six figures or more.  Also note that this does not include the cost of their benefits.   Now a lot of these highly compensated employees work for the Med Center.  But look at the number of nurses making six-figure executive level wages.   It is absurd.

    I don’t think the rank and file employees are grossly overpaid with respect to their regular wages.  Their benefits are very strong.  For the rank and file, I think the main problems are two:

    1. There are too many of them in the UC system because the UC system has not done enough consolidation of administrative functions.

    2. Their retirement benefits are too generous… primarily their retirement age and total benefits at retirement are both too generous.

    But the biggest problem is at the top-end.  There are too many UC executives and too many highly compensated employees.  And the pay levels at the top end are too generous… and like the rank and file, their retirement benefits are excessive.

    1. Barack Palin

      So Frankly, students are being asked to pay more and more for the lavish packages that many UC employees get and have less and less of a chance of ever getting that good of a job in today’s economy.

      1. Frankly

        BP – Yup.   I keep thinking that the business of higher learning is heading for a big crash just like the housing bubble.  I think the competition for scarce good paying jobs has caused parents and students to throw money at a college degree without really doing the cost-benefit.  Knowing what I know today, I should have spent all the money I spent on my two kids’ college education on a business they would run.   Send them to community college for two years to get a associates degree in business, and then buy a franchise they would own and run.  Regardless if the business succeeded or failed, they would learn more from that experience that would help them be economically successful than would any 5-year, $250k, beer-drinking and pot-smoking party at a state campus.

  4. Anon

    One of the arguments for high administrative salaries has been that it has to be done to keep top talent or these exceptionally talented people will go elsewhere (e.g. head of UCD Med Center); and then UC will be a more mediocre college system.  Personally, I have never bought into this argument, but for those of you decrying the huge administrative salaries, how do you counter that argument?.  For instance, Chancellor Katehi makes more than Chancellor Vanderhoff did, but it is my understanding (correct me if I am wrong) she has also brought in far more research dollars/alumni donations than her predecessors.

    1. TrueBlueDevil

      It is harder to argue against a top person, a chancellor or head of the Med Center who has big dollar responsibilities.

      Why not try getting the salaries of the 6 or 7 “directors” of Students Affairs. I think we only had 2 directors 25 years ago, 6 or 7 is a big jump. Paying top doctors is demanded by the market.

      When we compete for a prof or someone who teaches at Texas State or Cleveland Medical, I don’t see why we have to pay 10% more. Choose the snow of Cleveland, and it’s culture; or the California sun and such. I’d think we win.

    2. Frankly

      It is essential the cartel system.  Keep it a closed-loop hiring process where only insiders get the job, and pay scales are only measured within the cartel.  The cartel only competes for talent within itself.

      I have a friend that is an analyst working for the UCD Med Center that makes a salary of $73k per year.  It is not excessive given her responsibility and years of experience.  But she gets 100% of her healthcare taken care of an has no retirement benefit expense.  And she can retire at age 57 at 75% of her pay and full healthcare coverage for life.   Calculating the full monetary value of her pay and benefits, she is making a comparable six figures.

      Comparing her situation to a similar job in the private sector, her base pay is materially equal, but when comparing the value of the benefits… especially the pension and OPEB benefits and early retirement, she is compensated significantly more than her peers in the private sector.

      The problem we have with these super-generous public sector retirement benefits is that the employees don’t consider the true value.  They look at their base pay and squawk that they are not really over-paid and deserving of a raise.

      But taking my friend, assuming she will retire at age 57 and live until she is 92 that is 35 years of inflation-adjusted 75% pay and full healthcare (that adjusts to Medicare bridge coverage at age 65.)   Consider this to be about $7k per month.   Now using an immediate annuity (the do it yourself defined benefit pension) calculator for $7k per month in income for 35 years you would need $1.6 million.

      So for a private sector employee doing the same job and making the same wages, that private sector employee would have to save $1.6 million in a 401k by age 57 in order to equal the total compensation my friend is getting.

      Now add up all the employees getting similar benefits… especially the more highly-paid employees.

      This is the major source of the UC system hyper cost inflation.

      The other is labor bloat.  There are just too many employees.  Functions can be consolidated and outsourced.  Technology can be leveraged to replace administrators and academics.   Academics can teach more classes and publish fewer articles.

      1. Miwok

        Only SOME departments run with a lot of bloat. The bloat you talk about also consists of paying students as employees while they subsidize their education without financial aid.

        Another point is the pay scales, and as a former member of a Union Board that compared these numbers, I was surprised to learn UC takes the Same State money as California State and Community Colleges, and yet the State system pays their people 30% more for similar positions, while having less of them.

        UC takes a lot more corporate money and research grants than State Schools, and State and Community Colleges serve many more students with less research money.. According to the numbers above UC is $460M below the seven year ago level, a game they play with the Governor and Legislature every year. UCs were “promised” to get that money back after accepting cuts in past years, and now State are reneging.

        I have been working there when the administrators walk through and tell us we have to cut back 25%. This has happened more than once, and they always promise they will “get it back”. Only the people doing the work get laid off. This is the press release you never read, only they have “given more” to education. UC makes up for this currently by hiring all new employees without really hiring them, as “temporary or contract” workers. This can also include a lack of benefits, SSI, and no retirement or time in service. Not sure how they can even do this, but as a Land Grant school they claim they can circumvent State Law, and they do.

      2. Jim Frame

        It is essential the cartel system.  Keep it a closed-loop hiring process where only insiders get the job, and pay scales are only measured within the cartel.  The cartel only competes for talent within itself.

        I pretty much agree with this, and think it’s a sad situation.  But to be fair, the same situation pertains at the high end of the corporate world.  CEOs continue to get bigger and bigger compensation packages, even though their rank-and-file employees have been losing ground for decades, and even when their return to investors is abysmal.

        With regard to public employee retirement systems, I’m also in agreement (gasp!) with Frankly regarding defined-benefit plans.  I acknowledge that a well-run defined-benefit system can work just fine for everyone, but the problem is that they’re too easily gamed for short-term gains at the expense of long-term cost increases, increases that the taxpaying public is powerless to overturn.  The incentive for interested persons — executive management and elected officials, primarily — to game the system in exchange for scratch-my-back favors is simply too powerful.  We’ve seen it happen right here in Davis, with disastrous results that we’re still trying to overcome.

    3. South of Davis

      Anon wrote:

      > she has also brought in far more research dollars/alumni

      > donations than her predecessors.

      Did “She” (personally) “bring in the research money and alumni donations” or did she just happen to be Chancellor when the money and donations increased?

       

      1. Miwok

        Combination, SOD… I worked in that section and the numbers get fudged all the time. Only 12% of the UC Davis budget is tuition, that percentage changes all the time for less and less. Half of the tuition is comped, but not the fees, which are more than tuition.

        Some are gifted with the caveat that no money gets siphoned off by the University, therefore they invest or save it until interest pays for the administration of the money.

        Research money is announced, but the UC takes their cut of up to 50% for their take. Faculty members are sometimes livid, because their grants are for a certain amount, to the dollar, and instead they only get half.

        Some people donate only to a certain cause or department, hoping that will keep it mostly in the hands of people they intend it for. It doesn’t.

        If you have a gift in mind, check with the lawyers and the University Development officers at the highest level you can for more accurate information. You will not get much attention if it is under $25K.

    4. DavisBurns

      I heard a bit of a radio program while driving in which Gov. Brown was quoted as saying he didn’t think the UC system should be competing with the Ivy League schools.  Their job was to educate Californians.  Napolitano disagreed–she thinks we have to have competitive salaries for administrators and heads of departments and be a ‘world class university’.  You innovation park people should agree with her and be happy with the race for top salaries at the top or where will our rich ideas and spin off products come from.  I think we should be educating Californians.  I think we could get outstanding professors eager to teach if they were paid fairly and judged on teaching and not on how much grant money they brought in.

      1. Miwok

        There is a pecking order among the UCs where they all strive to be Stanford, or UC Berkeley, or UCLA. They make outrageous deals to raid talent from the other campuses, and their competitors. The Press releases usually don’t mention the inflated salaries, but if they do they never mention the perks, jobs for spouses, and positions created for families or friends that add to the true cost of getting them here.

        I was always told the State Schools are not supposed to compete with Ivy League, UC was. Maybe JB is trying to change that mentality, but it will be culture shock.

  5. Tia Will

    Frankly

    Academics can teach more classes and publish fewer articles.”

    And should they also do less research which is what allows them to publish those articles?

     

    1. Miwok

      From the years I spent at UC Davis, the research is what makes the University prominent. Few undergrads get to participate in it, but grads are what drive the innovation and Faculty drives them. Most articles are written by Grads, with collaboration and guidance of Faculty.

      Some Profs teach a lot, others delegate. I think all of them have different styles, and the ones I have worked with the last few years are VERY  hands on, and love being in the classroom.

      1. Don Shor

        Research and teaching are, if I recall, equal missions of UC. I don’t believe that is the case for the state college system. Research and good researchers are what give UC its reputation. It would be foolish to prioritize teaching over research. Perhaps the role of the community colleges should be enhanced. There is nothing wrong with splitting your college years between community colleges and a four-year college. It saves money and actually, in my opinion, can be a better way for a lot of young people to transition to a more rigorous program. If you’re undeclared, there’s little point in spending the money for what UC provides in your first year or two.

        1. Miwok

          Good point, Don, and until I supported Grad Students for over six years I thought differently. I also found some faculty who used them as personal servants, but for the most part it was a good view of what goes on.

        2. Anon

          I know from personal experience w my children that getting transferred from community college to a regular 4 year college can be difficult, w a lot of road blocks put in the way if grades in community college are not close to a 4.0.

        3. Frankly

          The research is great for graduate students that get to participate in it, but it doesn’t add much value to any of the majority of the undergraduate programs.  In fact, it detracts from the education value of the undergraduate programs because the professor is largely absent pursuing this other type of ego shrine… being well published so he/she and the university can claim much higher elite status that justifies the hyper inflationary cost of tuition.

          1. Don Shor

            The research is great for graduate students that get to participate in it, but it doesn’t add much value to any of the majority of the undergraduate programs.

            Completely untrue with regard to my field. Perhaps true about others.

  6. WesC

    Frankly:  “Note that UCD, including the Med Center, shows 40,047 employees in the database.   Note that 5,264 of these employees are paid six figures or more.  Also note that this does not include the cost of their benefits.   Now a lot of these highly compensated employees work for the Med Center.  But look at the number of nurses making six-figure executive level wages.   It is absurd.”

    Between the 2004-05 and 2009-10 fiscal years the UC medical centers’ revenue have exceeded their expenses by over $3.4 billion.    The excess revenues generated by the med centers remains in the clinical enterprise

    The medical centers use part of their revenue to help UC medical schools, providing over $400 million in support during in 2013 alone.  The UC med centers are for the most part financially independent self-supporting enterprises, receiving less than %1 of their operating budget from state funding.

    1. Frankly

      WesC – Thanks for that bit of information.  I did know that the med center was operating independently, but not at that profit level.

      However, I don’t think UCD is fully cost accounting all administrative costs for the medical center.  I could be wrong about that.   Similar to the point that grants support 100% of research, there are expensive administrative services required for personnel and facility to support research, and these administrative costs are largely absorbed by the university’s operating budget.

      I sat on a jury for a case by a migrant worker that got in a car accident and had to be airlifted by Life Flight to UCD Med Center and had a $1.4 million dollar bill by the time he was discharged.   With asked how their billing compared with other hospitals in the area, the UCD Med Center employee that was on the stand said that UCD does not consider what it charges with respect to competition… it just charges what it must to balance its books.

      So no doubt that UCD Med Center is benefitting from the deep pockets of insurance companies paying claims and passing on the bill to policy holders.   Just think of it as another tax to help fund the bloated UCD system.

      1. DavisBurns

        That is not how billing works.  If a person does not have insurance, they are billed for the full cost of services.  If a person has medical insurance, the insurance company is billed according to the discounted rates they have negotiated.

  7. WesC

    So no doubt that UCD Med Center is benefitting from the deep pockets of insurance companies paying claims and passing on the bill to policy holders.   Just think of it as another tax to help fund the bloated UCD system.

    The hospital system that is by far the best at price gouging is Sutter, which charges about 40-70% more than it’s rivals for a typical procedure.  As one person put it….

    “Sutter is a leader — a pioneer — in figuring out how to amass market power to raise prices and decrease competition,” said Glenn Melnick, a professor of health economics at the University of Southern California. “How do hospitals set prices? They set prices to maximize revenue, and they raise prices as much as they can — all the research supports that.”

     

    1. Frankly

      All health care providers that accept insurance have contracted procedure rates they are paid for by the insurance company.  So if you are talking about gouging, it would be for people without insurance coverage… but then most of them cannot pay anyway.

      What happens is the provider bills their retail price, but the insurance only reimburses the contracted rate.

      If you are a cash customer, try negotiating.   I have a high deductible HSA policy and I frequently negotiate for procedures if I am paying out of pocket.  Even the procedures that are billed at my contracted insurance company rates.

      But one thing is sure… providers are dropping Obamacare healthcare insurance policies because of the dismal reimbursement rates.

  8. DavisBurns

    Here is part of an LA Times story,  Brown said,

    Professors should teach more and do less research, he has said. Administrators shouldn’t be paid so generously — into the $300,000 and $400,000 range, plus big perks.
    UC contends it has to compete against Ivy League schools for talent.
    Nonsense, the governor implied. “Money doesn’t buy everything in this world,” he told Regent Richard Blum, a wealthy investor and husband of U.S. Sen. Dianne Feinstein. “If it did, I wouldn’t have anybody working for me.”
    UC “doesn’t have to follow the Ivy League” to recruit, Brown argued. “People will get very excited about an institution that has a moral depth that transcends the vagaries of the marketplace…. This is not Wall Street. This is the University of California, and we want to be different.”

    Boy does it feel good to hear someone say stuff like that.  We can be different.  Money doesn’t buy everything.  We aren’t Wall street. We want to be different. Let me vote for him again. Wow!

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