LAO Report on Higher Ed Contains Significant Pension Recommendations

The state’s Legislative Analyst has released a lengthyreport on funding higher education which covers UC, CSU, and the communitycolleges (as well as CalGrants).  Thereport is essentially a response to the governor’s January budget proposal withregard to higher ed.

Generally, the report tends to disagree with the governor’sapproach which the Legislative Analyst views as giving too much autonomy to UCand the other segments with regard to enrollment and other matters.  On the other hand, it documents the trendtowards reduced state funding and thus seems to continue the pay-less/say-moreapproach which is odd on its face.

The Legislative Analyst does raise questions about thetrigger cuts proposed by the governor in case his tax initiative does not passin November.

There is a lengthy section on pension matters, especiallyfor UC which has not received explicit state funding for its pension for overtwo decades and which has had to divert other funding to deal with resumedpension contributions.  The report seemsto favor some state funding for the UC pension and – significantly - does notcondition it on UC being covered by the statewide plan proposed by thegovernor.  That is a step in the rightdirection if followed by the legislature in the final budget.  The report favors somewhat less of a pensioncontribution than UC has requested.  However,establishing the principle of some state responsibility would be an advance.

Excerpts from the pension portion are below:

Retirement Costs

The Governor proposes major changes to the way in which some retirementcosts are funded for higher education. For CSU, the Governor proposes to nolonger make base adjustments to reflect changing retirement costs. For UC, theGovernor proposes (1) a $90 million base augmentation that could be used forpension costs or other purposes, and (2) no out–year adjustments for retirementcosts. The budget proposes no changes to the way retirement is funded for CCC.

Background

CSU Pension Benefits. CSU employees are members of theCalifornia Public Employees Retirement System (CalPERS)—the same retirementsystem to which most state employees belong. Funding for this system comes fromboth employer contributions and employee contributions. Each year, as is thecase with other state departments, CSU's employer contributions to CalPERS arecharged against its main General Fund appropriation. The employer contributionis based on a percent of employee salaries and wages that is determined byCalPERS and specified in the annual budget act. The Governor's budget annuallyadjusts CSU's main appropriation to reflect any estimated changes in theemployer contribution. For example, the Governor's budget reduces CSU's mainappropriation by $38 million due to a lower employer rate and lower payrollcosts in the current year. The CSU is expected to contribute $404 million toCalPERS in 2012–13.
UC Pension Benefits. Employees of UC (and Hastings) aremembers of the University of California Retirement Plan (UCRP). This retirementplan is separate from CalPERS and under the control of UC. Prior to 1990, thestate adjusted UC's General Fund appropriation to reflect increases anddecreases in the employer's share of retirement contributions for state–fundedUC employees. Starting in 1990, however, UC halted both employer and employeecontributions to UCRP because the pension plan had become"superfunded." Specifically, the plan at that time was enjoyingexceptionally strong investment returns, resulting in assets that exceededliabilities by more than 50 percent. This "funding holiday" lastednearly 20 years until the plan's assets had declined considerably andcontributions once again became necessary. In April 2010, both UC and itsemployees resumed contributions to the plan. The state, however, has notprovided UC with any additional funding specifically for that purpose.

Governor Proposes New Approach To Funding Retirement Costs

The Governor proposes two major changes related to funding for universityretirement plans:

• A $90 million base budget augmentation for UC that, according to the administration, "can be used to address costs related to retirement program contributions." The administration emphasizes that this funding is not being provided specifically to fund costs for UCRP. Rather, UC could use it for any purpose related to its state–related programs—including, but not limited to, UCRP.
• A new policy that the segments' budgets no longer be adjusted for changes in retirement costs in the future. Instead, state–related retirement costs would be funded entirely from the segments' unrestricted base appropriations.

Unclear Which Retirement Costs Are Affected. The Governor'sproposed language refers simply to "retirement costs." At the timethis analysis was prepared, the administration had not provided sufficientclarity on whether this would include costs for retiree health and dentalbenefits. For example, funding for CSU's retiree health care costs arecurrently bundled together with funding for other CalPERS retiree health carecosts. Since the administration has not yet indicated how it would split outfunding for CSU, we are unsure whether the proposal applies to these costs. Theadministration also was unable to provide information regarding base fundingfor retiree health costs for UC. For these reasons, our budget analysis onlyfocuses on funding for pension costs for UC and CSU.

UC Proposal Has More Merit,But Raises Several Questions

The request for pension–related funding for UC is more difficult andcomplicated than that for CSU. This is because (1) the state currently is notproviding any pension–related funding to UC, and (2) UC has full control overits pension system. To address the Governor's proposal, the Legislature shouldconsider the following questions:

• What is the main justification for the state to provide funding for UC's retirement costs? In other words, why is funding for these costs a state responsibility?
• Given that UC controls its own pension plan, are UC's pension benefits reasonable? How do they compare to the pension benefits the state provides state employees?
• How much funding should the state provide UC in 2012–13? More specifically, what methodology or calculations support the request for $90 million?
• Finally, should the state lock in the pension amount provided UC at the 2012–13 contribution level or provide UC with budget adjustments for pension costs in future years? …

Pension Costs Should Be Funded as Part of Workload Budget. Thestate currently provides funding for pension–related costs for all other stateagencies as part of a normal, workload budget. In other words, the stateprovides funding to state agencies for the salaries and benefits (includingpension benefits) related to their budgeted positions. Given that the stateprovides UC with funding for the salaries and benefits of some of itsemployees, it would make sense from a standard, workload budgeting perspectiveto also provide funding related to pension costs. As noted earlier, the statedid provide such pension–related funding to UC for many years prior to thepension holiday that began in 1990. (As we discuss in the nearby text box, thestate has repeatedly deferred a final budget increase for pension costs sincethat time.) Given that the university has had to restart its contributions toits pension plan in recent years, we find justification in its request that thestate also resume providing pension–related funding.
UC Pension Benefits Similar to State Employee Pension Benefits. Althoughthe state does not control UC's pension system, actions taken to date by theRegents have largely mirrored recent changes to state employee pensionbenefits. For example, the Regents have taken action to reduce pension costs inthe long term by increasing the minimum retirement age for new employees. Inaddition, …the Regents have approved increases to employee contribution ratesthat are beginning to bring them in line with state employee contributionrates, which are now generally 8 percent. (Some of UC's proposed employeecontribution increases are still subject to collective bargaining.) Additionalcontribution increases beyond July 2013 will also likely be necessary to reducethe plan's significant unfunded liability that has accrued due to thedecades–long pension funding holiday and recent market downturns.

UC's Estimate of State's Share of 2012–13 PensionCosts Is Overstated. The $90 million that UC requested from theadministration is only a fraction of the $255.6 million that UC estimates to bethe state's share for 2012–13. The UC states it requested the lower amount inrecognition of the state's severe fiscal shortfall. The university furtherindicates that it will likely seek the full amount of what it estimates to bethe state's share (which it calculates could rise to roughly $450 million) infuture years...

We find two issues that the Legislature should carefully consider withrespect to how the university has estimated the state's share of UC retirementcosts.

• First, we find that the request for $90 million in 2012–13 is overstated. …UC's estimate of the state's share of its 2012–13 retirement cost increase totals about $78 million. The UC appears to be requesting a greater amount because it believes that the state should provide contributions to account not only for incremental retirement costs in 2012–13, but also for part of the cost increases in the two prior years. We take a different view. The UC has managed—by both redirecting internal resources as well as increasing student tuition—to fund all of its employer contributions in both 2010–11 and 2011–12. If the Legislature were to provide funding related to prior years, the funding would in effect free up existing UC base funding for other purposes. In our view, given the state's fiscal shortfall, such an augmentation would be unwise.
• Second, the university's calculation of the state's share of retirement contributions includes employer costs related to tuition–funded salaries. From a workload budgeting standpoint, the state portion of retirement costs should only be related to state–funded payroll costs. Given, however, that the Governor's budget assumes no increases for tuition in 2012–13, the Legislature may wish to consider providing the funding for pension costs related to tuition–funded salaries in 2012–13. In future years, higher pension costs—just like any other UC cost—presumably would be covered by the General Fund and tuition fees in proportion to their current funding levels.

Timing Not Right to Lock In Base Funding for Pensions. Aswith the CSU proposal, now would be a poor time to choose to lock in a basefunding level for UC pensions, given that the Governor is separately proposingto modify public employee pensions to reduce costs in the long run. Inaddition, as noted earlier, UC intends to increase its employer contributionsover the next few years, although it has not yet reached agreement with all ofits union–represented employees on the employee contribution rate. In our view,the Legislature should carefully evaluate future requests from UC for pensionfunding on a year–by–year basis in the context of the university's currentpension benefit and contribution structure. In the long term, however, it couldmake sense to expect UC to fund its pension costs out of its base budget, giventhat the university's retirement system is separate from the state's. Thiscould only work once a reasonable funding level has been identified andcontribution amounts have stabilized.

Recommendations

…Recommend Restarting Budget Adjustments for UC. Asdiscussed above, we find that there is sufficient justification on a workloadbudget basis to provide UC with an augmentation that the university could useto address its pension costs. We recommend, however, that the Legislature onlyprovide funding for the incremental change in 2012–13 in UC's pension costs forstate– and tuition–funded employees—which we estimate to be $78 million. Thiswould mean reducing the Governor's request for $90 million in General Fundsupport by $12 million. In addition, we recommend that the Legislature adoptintent language in the budget specifying that in the future funding for UCretirement costs (1) shall be determined annually by the Legislature, (2) shallbe contingent on such factors as the comparability of UC's pension benefits andcontributions to those of state employees, and (3) shall not necessarilyinclude funding for tuition–supported employee pension costs or pension costsincurred prior to 2012–13.

The full report is at http://lao.ca.gov/analysis/2012/highered/higher-ed-020812.pdf

A video presentation of the report highlights is availablebelow:

UC Tuition: His Way or the Conway?

The photo shows Assembly Speaker John Pérez talking to GOPminority leader Connie Conway.  Given theexcerpt below from today’s online San Francisco Chronicle, let’s hope he isbeing super-persuasive.

==============
Excerpt:

California students from middle-income families wouldreceive massive breaks on tuition and fees at the state's colleges anduniversities under legislation Assembly Speaker John Pérez plans to introducetoday at the Capitol.  Under the plan,undergraduate students from families with household income of less than$150,000 would have their tuition and fees cut by two-thirds, bringing the costbelow what it was nearly a decade ago.  Itwould amount to a $4,000 annual savings for California State University studentsand just over $8,100 for students attending the University of California andwould take effect as soon as this fall. Both new students and current studentswould be eligible…

The speaker's office estimates the program would cost thestate about $1 billion per year, which would be raised by eliminating acorporate tax break that was approved in 2009 as part of budget negotiationsbetween Democrats and Republicans. That tax break allows corporations to choosethe cheaper of two formulas for calculating the taxes they owe…

Any change in the tax requires a two-thirds vote of the Legislature,which means at least two Republicans in each house must agree…

Full story at http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/02/08/MNOJ1N2D0B.DTL

Actually, we have some audio of what Pérez is saying to Conway:

CSU establishes salary cap for campus presidents

CSU has adopted a salary cap for its campus presidents, equivalent of UC chancellors.  Will the Regents take similar action?

The California State University board of trustees on Wednesday capped salaries of newly hired campus presidents at $325,000 after an outcry over a $400,000 pay package approved for a new president last year when tuition shot up 12 percent.  The new policy will establish a salary ceiling of $325,000 or raise the salary by no more than 10 percent of the pay received by the outgoing president...

Full story at http://www.sacbee.com/2012/01/25/4214329/csu-trustees-consider-capping.html

Read more here: http://www.sacbee.com/2012/01/25/4214329/csu-trustees-consider-capping.html#storylink=cpy

Ballot Initiative Offers Online Route into UC

With a formal title and a favorable fiscal analysis in hand,backers of an initiative to broaden access to online college preparatoryclasses will begin gathering signatures today to qualify for the Novemberballot.
The proposed initiative would give students the right to go elsewherefor a course required for admission to a UC or CSU campus if their schooldoesn’t offer it. While they could drive to a nearby district, they alsocould take the course online. It would establish a California Diploma, which would be awarded when a student completedthe 15 required courses, known as A-G…

(The sponsoring) group has oral commitments for $500,000 ofthe $2 million needed to collect 504,000 verified voter signatures, (aspokesperson) said. Donors will start identifying themselves in coming weeks;many of the backers are expected to be from Silicon Valley…

Full story at http://toped.svefoundation.org/2012/01/04/next-step-for-online-ed-initiative/

The official summary of the initiative reads:

Online K-12 Education.College Preparatory Courses. Initiative Statute.

Summary Date: 01/03/12| Circulation Deadline: 06/01/12 | Signatures Required: 504,760

Proponent: Phillip D.Kohn (714) 641-3415

Authorizes schooldistricts, county offices of education, and charter schools to claim averagedaily attendance funding for student participation in approved online courses.Authorizes school districts to contract with public and private providers todeliver online courses taught by credentialed teachers. Allows students to takeonline courses offered by any school district, regardless of student'sresidence. Provides students access to courses required for admission to stateuniversities, and establishes the California Diploma, which demonstratescompletion of courses required for University of California and CaliforniaState University admission. Summary of estimate by Legislative Analyst andDirector of Finance of fiscal impact on state and local government: In the longterm, local school district savings potentially in the hundreds of millions ofdollars annually if schools experience efficiencies and widespreadparticipation in the use of online courses. These savings would be offset insmall part by administrative costs to implement the measure, including localcosts for developing online curriculum, contracting with online providers, andensuring students access to online courses as well as state costs for changingthe existing school payment system and issuing California Diplomas toqualifying students.

Initiative at http://ag.ca.gov/cms_attachments/initiatives/pdfs/i1005_11-0062_(student_rights).pdf

Free Textbooks from State Online Source?

Darrell Steinberg wants digital library of free textbooks (Excerpt 12/13/11)

Senate President Pro Tem Darrell Steinberg announced today that he will push for legislation to create an online open source library to reduce the cost of course materials for college students across the state. The Sacramento Democrat framed the proposed project as an effort to lower costs for students struggling to cope with higher fees and tuition rates at California's public colleges and universities…

Steinberg said the average student spends $1,300 a year on textbooks, a figure his staff said is based on projections the University of California, California State University and community college systems provide to students for budgeting purposes. Under his proposal, materials for 50 common lower division courses would be developed and posted online for free student access. Ordering a paper copy would cost $20, compared to the $200-plus price tag carried by some books. Steinberg plans to seek $25 million to create his proposed Open Education Resources system, with some funding going towards soliciting course material contributions from academics, nonprofits, Silicon Valley developers and the book publishing industry to be shared freely within the system. A new council of faculty leaders from California's public higher education system would be tasked with selecting the courses for the first round of open source textbook development and reviewing and approving the materials added to the library...

Full article at: http://blogs.sacbee.com/capitolalertlatest/2011/12/steinberg-open-source-texbook-bill-would-lower-student-costs.html

It's great to be free:

PPIC Poll on Public Higher Ed in California

The charts above come from a poll taken by the Public Policy Institute of California available at:

http://www.ppic.org/content/pubs/survey/S_1111MBS.pdf [Click on the table above to enlarge it or go to the report itself.]

You can interpret the charts as you like. As the saying goes, an optimist is someone who thinks we are in the best of all possible worlds - and a pessimist is also someone who thinks we are in the best of all possible worlds.

It Sure Looks Like the Trigger Is Going to be Pulled

There is an advance report from the Sacramento Bee that the Legislative Analyst later today will be announcing that projections of revenue will fall sufficiently short of assumptions to fire the budget trigger – which further chops the UC budget this year. By itself, just the LAO projection does not fire the trigger but it is part of the mechanism. The LAO report is not yet posted.

From the Bee:

California would impose $2 billion in mid-year "trigger" cuts next month, mostly through K-12 school reductions, under a new revenue forecast issued this morning by the nonpartisan Legislative Analyst's Office… The analyst's report is not the sole determinant of whether the state will impose those cuts, but it is one of two tools the Department of Finance must rely upon before deciding whether to slash spending. The finance department will issue its own forecast in December. The Analyst said the state will not receive $3.7 billion of the $4 billion revenue bump that Gov. Jerry Brown and lawmakers optimistically relied upon to help close the budget in June. The enacted budget projected the state would receive $88.5 billion in revenues and transfers; the analyst says it will only get $84.8 billion…

Full story at: http://blogs.sacbee.com/capitolalertlatest/2011/11/legislative-analyst-2-billion-of-mid-year-cuts.html

Of course, if the legislature could corral enough votes, it could stop the trigger. Let’s hope everything works out OK:

UPDATE: The LAO report has now been released. You can find it at

http://www.lao.ca.gov/reports/2011/bud/fiscal_outlook/fiscal_outlook_2011.pdf

As usual, the report - following the great state tradition of fuzzy language - uses "deficit" in a way that mixes up past debt (a stock) and flows. It also follows the great state tradition of including "transfers" with revenues which has an obscuring effect.

What the report basically says - but not in the language below - is that last year 2010-11 the state ran a surplus of about $2.8 billion (which included temporary taxes that are now gone). But that surplus was not enough to reduce the negative reserve in the general fund to zero or get it into positive territory. Cuts in spending were made for the current year and a revenue trigger was included which fires if optimistic revenue assumptions are not met. It looks as if the trigger will fire. The state will run a deficit (revenues and transfers < expenditures) of about $500 million in 2011-12, which makes the general fund reserve that much more negative. Next year - if nothing is done (which won't happen) - the state would have another deficit (revenues and transfers < expenditures) of $9.7 billion.

The task of the legislature starting in January will be to begin making further cuts, apart from what the trigger produces, unless someone comes up with a way of obtaining a substantial increase in revenue beyond what assumed economic group would produce. (Don't even think about what would happen if there were a double-dip recession!)

UC will experience a trigger cut of $100 million this year. Had the Regents meeting not been cancelled, President Yudof would have given the board a budget request to the state that all of this info more or less guarantees would not have been adopted by the legislature. Since the Regents meeting has been postponed, the folks at UCOP might well want to reconsider what to present whenever that meeting is reconvened in the light of the LAO report.

LAO Video on Report:

Further update: CSU approves 9% fee hike amid raucous protests
See http://blogs.sacbee.com/capitolalertlatest/2011/11/csu-approves-9-fee-hike-amid-raucous-protests.html

Out of the box on higher ed: Uh Oh

From the Sacramento Bee today (excerpt):

Lt. Gov. Gavin Newsom railed against tuition increases and said Wednesday that the state's master plan for higher education is outdated, promising "a different narrative" for higher education by the end of the year.

It was unclear what the plan might contain or how Newsom, a Democrat, might propose to fund it.

"We're going to come up with some out-

of-the-box recommendations, is our hope and expectation," he told The Bee's Capitol Bureau.

Fifty years after the production of the California Master Plan for Higher Education, Newsom said he and officials are preparing to "try to create a different narrative for higher education as a system, as opposed to UC as a system, CSU as a system and community colleges." ...

Full story at: http://www.sacbee.com/2011/10/27/4010012/gavin-newsom-wants-pattern-interrupt.html

Note that the Master Plan's basic purpose was in fact to have 3 well-defined systems.

Sometimes it's best not to open a box:

Student Aid Alliance

From Inside Higher Ed today (excerpt below) comes a note about the Student Aid Alliance, a higher education group of which both UC and CSU are members.

Alliance Pushes to Save Pell From 'Super Committee'

October 25, 2011 The Student Aid Alliance, a group of 74 higher education associations, advocacy groups and other organizations, announced a lobbying campaign Monday to fight possible cuts to federal financial aid as the Congressional committee on deficit reduction enters the final month before its Nov. 24 deadline…

There are various links in the article including a petition that you may find of interest.

Full story - with the links - at: http://www.insidehighered.com/quicktakes/2011/10/25/alliance-pushes-save-pell-super-committee

Cal State-Westwood?

Gov. Pat Brown signs the Donahoe Act in 1960 implementing the Master Plan for Higher Education.

The LA Times ran an editorial yesterday, lamenting rising tuition at UC and the lack of state support. It also threw out some suggestions. Among them:

…The university also should consider a temporary policy that favors admission to students in the immediate geographical area for a certain percentage of new undergraduates. That way, more students could live at home and avoid the hefty cost of a dorm. UC campuses are not usually commuter schools, but troubled times call for a willingness to make sensible changes…

Actually, many undergrads enter UC and UCLA as transfer students from local community colleges which are a) inexpensive and b) allow living at home. CSU campuses are also an option. Indeed, that was what the Master Plan was all about, i.e., differentiating the three higher ed segments. The LA Times’ suggestion above is essentially a kind of Cal State-Westwood, Cal State-Berkeley, etc., idea.

The real story here is that President Yudof came to the Regents in September with a proposal for a multi-year schedule of tuition increases in the light of failing state support and that the Regents did not go for it – or for any other solution. (The audio of that session was posted yesterday on this blogsite.) It appears that the old adage about not calling the question before counting the votes was ignored in that episode.

Is the Regents non-action on the Yudof proposal the result of a lack of confidence in the President of UC? Until now, the Regents pretty much endorsed presidential proposals for tuition hikes. In any event, what needs to happen is not implementation of some ad hoc suggestion such as that made by the LA Times. Rather there needs to be a process involving UC (not just UCOP but the faculty and Academic Senate), the Regents, the governor, key people in the legislature, various interest groups in the state, and others that is aimed at looking at the budget outlook and negotiating an accord. The Regents are evidently tired of being in a reactive mode in which the state cuts the budget and tuition is hiked in response – with the Regents then getting the blame.

The full LA Times editorial is at http://www.latimes.com/news/opinion/opinionla/la-ed-uc-20111009,0,5898256.story

A Political Factoid for Today

Question: Can a UC campus foundation give money to ballot campaigns? If so, has it happened?

Answer: The UCLA Foundation has twice given money to campaigns for ballot propositions in the past decade. Both propositions involved money for higher ed, including UC. In 2004, the Foundation gave $57,087 to support Prop 55 – a bond measure for education which narrowly passed. In 2006, it gave $87,550 in support of Prop 1D – also an education bond measure but which passed by a respectable 56.9%. Other UC and CSU foundations have made similar contributions.

You can find the contribution information by going to http://www.followthemoney.org/ and typing “UCLA Foundation” in the search option. Election results are available at http://www.sos.ca.gov/elections/sov/2006_general/measures.pdf

and

http://www.sos.ca.gov/elections/sov/2004_primary/vote_summaries.pdf

Changing Admissions Standards?

An earlier post on the UC-Berkeley affirmative action "bake sale" controversy noted that the issue that sparked that controversy was a bill - now on Gov. Brown's desk - that would possibly relax the ban on affirmative action in UC student admissions enacted by voters in Prop 209. However, there are other changes in admissions standards underway that have received less attention in the news media. And another bill on the governor's desk is involved. See below:

UC turns career tech ed-friendly (excerpt)

9/30/11, John Fensterwald - Educated Guess

A decade ago, 258 career technical education courses counted toward satisfying requirements for admission to the California State University or the University of California. Today, the number has grown to 9,079 courses, closing in on the 2012 goal of 10,000 courses that the Legislature set several years ago.

The numbers reflect a dramatic shift in the mindset toward CTE (Career Technical Education) by the University of California, whose faculty determines which courses meet A-G, the 15 subjects that all students must pass to apply to a four-year state university. They dispel the myth that UC discourages the submission of CTE courses for A-G approval...

In years past, it’s been true that UC professors, as definers of rigor, looked down their noses at applied learning. But that has changed, as UC felt pressure from the top – the Legislature, led by Senate President pro Tem Darrell Steinberg – and the bottom – a groundswell from high schools, encouraged by the Irvine Foundation – to expand CTE and inject real-world learning into academic courses.

…Business Algebra II was created over a four-day retreat at Lake Arrowhead in May. It was organized by the University of California Curriculum Integration Institute, which brings together CTE and academic high school teachers, UC professors, and education experts to design courses that cross disciplines. One of Steinberg’s bills, SB 611, now sitting on Gov. Jerry Brown’s desk, would write the Institute into law and expand the course offerings, as state money permits…

From: http://toped.svefoundation.org/2011/09/30/uc-turns-career-tech-ed-friendly/

The notification of admissions process may be different from what typical readers of this blog will remember:

Too Far, Too Fast?

You may have noticed in yesterday’s LA Times or other papers that CSU Chancellor Reed said he will NOT ask for a multi-year plan involving scheduled tuition increases:

California State University will not seek a second tuition increase this academic year even if it suffers a further $100-million cut in state funding, the system's chief executive said Wednesday. Chancellor Charles B. Reed, addressing trustees who were meeting in Long Beach, also rejected adopting a multi-year budget that would incorporate annual tuition increases. Some higher education leaders argue that such a move, though controversial, would provide stability and help campus leaders, students and parents better manage education costs…

Reed downplayed the prudence of the multi-year approach, arguing that the current budget volatility made it "too difficult to plan in this environment."

Full story at http://www.latimes.com/news/local/la-me-calstate-trustees-20110922,0,4287564.story

The article also contrasted the Reed approach with the Yudof approach. As readers of this blog will know, UC President Yudof presented a multi-year tuition increase plan at the September Regents meetings – apparently assuming that the Regents would adopt it. They didn’t. (Preliminary audio of some of the September Regents meeting is on this blog; we will post the entire meeting when we get the recordings from the Regents.)

There is an old political adage about not calling the question unless you have counted the votes. Up to now, President Yudof’s recommendations on budgets, tuition, etc., have been pretty much rubber stamped by the Regents, although some dissents have been heard from a minority. CSU’s Reed seems to have learned something from the UC-Yudof-Regents episode. There may be consequences down the road if there is now a gap between the UC President and the Regents.

Sometimes, going out too far and too fast leads to unforeseen results:

Golden Silence?

Our colleagues at CSU and the community colleges feel the need to be outspoken about the impact of state budget cuts and possible upcoming “trigger” cuts to higher ed. Somehow, UC is not being quoted in the various news articles about this recent trend in public complaints. Is UC’s silence golden? Contrary to the headline on yesterday's post on this blog, maybe more needs to be said.

Example 1:

Outgoing SF State President Slams Governor: Brown "doesn’t seem to appreciate high-quality education in California”

Story at http://www.baycitizen.org/education/story/outgoing-sf-state-president-slams/

Example 2:

California is witnessing a slow and steady decline of its prized systems of higher education specifically because legislative Republicans have blocked efforts to raise taxes to pay for them, the community college and state university chancellors said Monday in a blunt and sobering back-to-school message.

Story at http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/08/22/MNH11KPC7C.DTL

Meanwhile, local editorial writers need some education of their own. They continue the notion that the less the state decides to pay UC, the more say it should have. Here is an example (excerpt):

The University of California's latest move offers a teachable moment about cognitive dissonance: The university plans to hand out pay raises to faculty and other staff, even as UC officials hike tuition and bemoan state funding cuts. UC should jettison the raises and focus on controlling costs instead of boosting expenses. UC President Mark Yudof announced last week that the university would offer merit pay hikes -- generally worth 3 percent of pay -- to faculty and nonunion staff earning less than $200,000 a year. Newly hired or promoted employees, along with those earning more than $200,000 a year, would not be eligible for the additional pay.

But UC administrators apparently need a remedial course in public relations. The university could take few steps more likely to stir public anger than announcing pay raises on the heels of budget cuts and student fee hikes. Undermining public good will is a bizarre approach for a university that depends on public support…

Full editorial at http://www.pe.com/localnews/opinion/editorials/stories/PE_OpEd_Opinion_D_op_22_ed_ucraises.386b723.html

“…depends on public support” UC budget $20 billion. State support $2.5 billion. Repeat: UC budget $20 billion. State support $2.5 billion.

Silence isn’t golden for UC as long as the $20-$2.5 message is not being endlessly repeated. Otherwise, folks will think we have nothing to say:

No More Hired Guns?

Governor blasts California universities' hiring of pricey presidents:
Jerry Brown criticizes the trend of paying high salaries to 'hired guns' from out of state instead of seeking Californians who might take less

Carla Rivera, Los Angeles Times, July 28, 2011

Gov. Jerry Brown on Wednesday criticized leaders of California's public universities for recruiting highly paid "hired guns" from across the country to run campuses instead of looking for home-grown talent that might be willing to work for lower salaries. The governor said officials at California State University and the University of California appeared in recent salary decisions to have adopted a mindset that market forces trump public service, but he said that must change, especially as the state struggles to close a budget deficit that has forced severe cuts.

…The remarks were in response to the continuing public outcry over the decision by the Cal State Board of Trustees this month to approve an annual salary of $400,000 for Elliot Hirshman, the new president of San Diego State, at the same time the school increased annual student tuition by 12%.

…William G. Tierney, director of USC's Center for Higher Education Policy Analysis, described as "flat-footed" the two university systems' recent decisions to raise tuition and the salaries of highly paid executives in the same board meetings. (UC leaders this month also approved a nearly 10% tuition hike for the fall, at the same time granting a large pay raise to the chief executive of UC San Francisco's medical center.) "But the real problem is that the governor's strategy with higher education is simply to give them less money, and I don't think the systems have been good with how to make strategic cuts," Tierney said. "The governor's letter … wins political points, but it doesn't solve the education problem."

Full article at http://www.latimes.com/news/local/la-me-calstate-salary-20110728,0,6185738.story

Your CV looks good but we can’t afford you:

Higher Ed Dream Act (One of Them) Signed by Governor

Gov. Brown signed AB 130 by Assemblymember Gil Cedillo (D-Los Angeles) – Student financial aid: eligibility: California Dream Act of 2011. The new law allows illegal alien children who have been raised in California to receive financial aid in public higher education institutions (UC, CSU, community colleges). However, the aid to which the law refers is private scholarship money.

The issue of such aid has arisen in the controversy over tuition increases at UC. Although the university provides assistance to lower-income students, it cannot do so with public monies including tuition money to illegal alien students. Protests over UC tuition increases have noted that these students are not protected by UC tuition assistance programs and so pay whatever increases occur.

A more far-reaching bill is still in the hopper that would allow Cal Grants and other public aid to go to such students. Brown indicated he would likely sign that bill when it arrives.

A bill signing ceremony can be found at:

Watch live streaming video from asmdc at livestream.com

Fee vs. tax

The Sacramento Bee today runs an article on a shift in the new state budget towards "fees" and the impact on particular households. Temporary tax extensions ended in the last fiscal year. The legislature raised certain fees as a result. However, as the excerpt above shows, the dramatic fee increases occurred at UC and CSU where tuition went up, not directly by action of the legislature but through the governing boards of the two systems.

The full graphic from which the excerpt above was taken and the accompanying article are at: http://www.sacbee.com/2011/07/24/3790500/california-lowers-taxes-raises.html

Data on California Higher Ed

Inside Higher Ed today pointed me towards a report on data concerning higher ed in California from the Institute for Higher Education Leadership and Policy (CSU-Sacramento). The report covers the three systems of higher ed (CCs, CSU, UC) although often not breaking out the three separately.

For example, the chart above (from Figure 14 of the report) shows that while college-going directly from high school by race is qualitatively in line with stereotypes, the main gap quantitatively between whites, Latinos, and blacks occurs at the K-12 level, i.e., dropouts and late high school finishers. (Asians are substantially above the other three groups.) The chart will be clearer if you click on it.

You can find the full Institute report at http://www.csus.edu/ihelp/PDFs/R_Consequences_of_Neglect.pdf

Raiding the Bank

California's University of ATM

Joe Mathews, PropZero (KNBC), 7-19-11

California's public university systems aren't cash machines. But the state is treating them as such. Consider what's happened just this year to the University of California and the California State University systems. In March, the legislature and governor took $500 million from each system to balance the budget. Then in June's budget agreement, the state took another $150 million each.

But the withdrawals from this strange ATM doesn't stop there.

The budget includes provisions that could trigger another $100 million each in cuts in the likely event that tax revenues don't keep up with the fantasy-based projections in the budget agreement.

To add injury to greater injury, budget-related legislation authorizes borrowing $1.7 billion from the universities.

That's sort of like stealing from your neighbor, then asking for a loan from the same guy.

Of course, it's hard to blame the legislature and governor for this.

The universities are an easy target in the California budget system -- because voters have erected budget protection for so many other budget pieces. The voters have chosen to turn their universities into a giant cash machine.

Here's what is beyond the pale: politicians who blast tuition increases at the universities.

When you keep taking money out of your account, you can hardly blame the bank for trying to raise more capital.

From http://www.nbclosangeles.com/blogs/prop-zero/Is-the-University-of-California-a-Bank-125761593.html

Will There Be an Overflow from the CSU Executive Pay Issue to UC?

The Sacramento Bee features a story today about legislative moves to cap executive pay at CSU. As noted in a prior blog posting, the CSU board raised pay of an incoming campus president by $100,000 while approving a tuition increase. UC is mentioned in the excerpt below. In principle, the Regents have constitutional autonomy although the legislature sometimes ignores it or writes bills that impose something on CSU and urges UC to follow.

From kitchen tables to Capitol offices, two decisions California State University trustees made earlier this week have left Californians seething.

…And now lawmakers are tapping into the outrage. At least three state legislators are working on bills that would curb executive pay at CSU. Sen. Elaine Alquist, D-Santa Clara, has drafted Senate Bill x1-25, which would prevent CSU from giving administrators raises above 10 percent in any year the university increases tuition for students. It would include sitting executives and new hires.

…Sen. Ted Lieu, D-Torrance, who wrote a letter to CSU trustees this week asking them to rescind the $100,000 increase, said he plans to introduce his own bills on the matter next month. One would say CSU can't increase administrator salary when there is a tuition increase or for two years following. Another would place a cap on how much CSU can pay its executives, tying it to "some rational compensation level," Lieu said.

…Sen. Leland Yee, D-San Francisco, wants to reintroduce a bill he wrote last year that would prevent CSU from giving executives raises in any year state funding decreases, said his spokesman Adam Keigwin.

…Gov. Jerry Brown doesn't typically comment on legislation until he acts on it. But a letter he wrote to CSU trustees this week may be giving legislators some hope for their bills. On Tuesday morning, the day of their vote, Brown asked trustees to reconsider plans to pay Elliot Hirshman, the new San Diego State president, a $400,000 salary.

…Hirshman's salary makes him the highest-paid campus president in the CSU system and tops his salary at his last job as provost of University of Maryland, Baltimore County by $133,000.

…University of California regents also met this week. They too raised tuition on the same day they gave some executive raises. The UC Student Association issued a statement criticizing the $27,500 raise for Vice President Patrick Lenz. But generally the UC decisions have not sparked the outcry that has ricocheted about CSU. That may be because two of the executives who got raises this week are paid by UC's hospital system. And Lenz, who is paid by state funds, got a raise of 10 percent…

Full story at http://www.sacbee.com/2011/07/16/3773608/lawmakers-move-to-cap-csu-executive.html

There can be an overflow of such issues from CSU to UC, leaving a mess: