By Steve Wiegand
swiegand@sacbee.com The Sacramento Bee
Published: Sunday, Feb. 7, 2010 – 12:00 am | Page 1A

On a mild, overcast day in October 2007, a University of California graduate lobbed a rhetorical bomb at his alma mater: What if the public university went private?

“Suppose,” mused state Treasurer Bill Lockyer in a widely distributed report on California’s fiscal future, that “the state eliminated all its direct general fund support from the UC system, allowing it to set its own budget and raise revenues to replace the state’s share.”

Lockyer’s supposition, which he was quick to point out he wasn’t advocating, sparked an uproar among academic leaders and editorial writers, then slipped back into the Capitol’s sea of partisan squabbling and budget crises.

But the issue has never really stopped making waves. As California’s iconic Master Plan for Higher Education marks its 50th anniversary this year, and the state struggles to balance its books, variations of Lockyer’s “privatization” question are being posed more frequently.

“Should higher education be treated as a public good,” asks Stanton Glantz, a University of California, San Francisco, professor of medicine, in a position paper posted on a faculty association Web site last August, “or should it be viewed as a private good to be paid for by its customers (students and their families) and voluntary private donors?” In Sacramento, it’s not so much an ideological issue as a financial one.

The budget share of every other education system that the state (i.e., taxpayers) helps pay for, from kindergarten to community colleges, is in large part assured by Proposition 98. The 1998 voter-approved measure guarantees K-14 schools a set slice of the state’s fiscal pie.

Similarly, the federal government mandates minimum state spending levels on many health and welfare programs. But the 10-campus University of California and the 23-campus California State University system have no such protection. As a result, the state’s support of higher education in the past few decades has ranged from shaky to problematical:

– The portion of the general fund dedicated to higher education has kept pace or grown more than the overall general fund only 12 times in the past 32 years.

– The state’s direct spending on four-year universities has dropped from 11.1 percent of the general fund budget in 1984 to 6.2 percent in 2009. Spending on prisons, meanwhile, climbed from 4.1 percent to 8.7 percent.

– State aid per student at California State University campuses has dropped 57 percent over the past two decades, and 63 percent at the University of California. California government is still more generous than those of other states when it comes to support of public higher education.

The state will spend about $4.6 billion on its four year universities this fiscal year, or about $8,600 per full time student, according to the California Post secondary Education Commission.

While California taxpayers still fund about half of UC’s “core budget” for undergraduate instruction, taxpayers in Michigan, Virginia, Oregon and other states cover less than 15 percent.

But the gap is closing. Of the nation’s 10 most populous states, only Florida’s support of public higher education has dropped more in the past three years than California’s.

“I actually believe that we are in imminent danger of losing our quality and competitive edge,” UC President Mark Yudof told an Assembly committee in December.

Yudof and others have pointed out that as the state’s financial support has waned and the universities’ financial fortunes have ebbed, so have admission rates: In 1977, UC Berkeley accepted two freshmen for every one it turned away. In 2007, it was one accepted for every three rejected. But the laments of higher ed leaders have fallen on only somewhat sympathetic legislative ears.

“We’ve been making cuts across the board, and I don’t like it … none of us do,” said state Sen. Leland Yee, a San Francisco Democrat and a harsh critic of what he says is a “rogue attitude” by the higher ed systems’ administration. “I’m not unsympathetic to their cry for more money … but they can’t ask for more money and then continue to be largely unaccountable for how it’s spent.”

Beyond demands for more accountability, however, is the fact that lawmakers facing a current budget deficit of about $20 billion aren’t likely to find significantly more money to give.

Gov. Arnold Schwarzenegger has proposed relatively generous increases for UC and CSU in the fiscal year that starts July 1.

But even if legislators go along, it would still be hundreds of millions of dollars less in state aid than the systems were getting three years ago – and that doesn’t take into account growing enrollment.

It also means trying to find money from sources beyond the state budget, such as:

Tuition

Last November, following a 20 percent cut in state support, UC regents increased undergraduate fees 32 percent, pushing them over $10,000 a year starting next fall.

But even with nose-bleed increases in recent years, the cost of public colleges in California is still one of the world’s great education bargains.

Tuition at UC Berkeley, for example, is still below that charged by flagship public universities in Michigan, Illinois and Pennsylvania, and far below that charged by similar private institutions.

Moreover, UC’s “Blue and Gold Opportunity Plan” covers fees that aren’t paid for by state and federal grants for students whose family’s annual income is less than $60,000 ($70,000 next year.)

Even so, critics contend that almost-continual hikes – UC tuition has quintupled since 1990 – are squeezing middle class Californians and intimidating low-income students from even applying.

“By cutting state funding, what the Legislature has done is impose a ‘parent tax,’ ” said Bill Bagley, whose perspective is shaped by his experience as a UC grad, a former legislator and a one-time UC regent.

“It’s the easy way out, but meanwhile the costs of getting a public education just keep going up and up for California’s kids.”

The ‘Michigan model’

Faced with a crumbling economy and waning tax revenues, Michigan officials began paring the state’s support of the University of Michigan in the late 1970s.

The university responded by sharply raising tuition, hiring vendors rather than state employees to run cafeterias and other services – and opening up more spots to non-Michigan residents who pay much higher out-of-state fees.

As a result the university, which one of its officials recently referred to as a “privately financed, publicly affiliated” institution, has been able to better weather the vagaries of state government financing.

But its fees are among the highest of any public university, its minority enrollment among the lowest, and a third of its slots go to students from outside the state.

“I can predict, with some certainty, that in the absence of state and federal funding, the University of California would inevitably be compelled to follow the model of Michigan,” warned UC Davis Chancellor Linda Katehi in a speech last month, “by relying on privatization … access would be determined by assets rather than ability.”

Private sources

Individual gifts and corporate grants have long been a key source of UC funding. But, university officials point out, they almost always come with a requirement that they be spent on specific programs.

In fact, 90 percent of the university’s budget that goes to its “core function” of instruction still comes from tuition and state support.

Private grants also raise concerns that the priorities of individuals and companies will conflict with academic goals.

At Cal Poly San Luis Obsipo, for example, a $500,000 grant from the Harris Ranch cattle company is being held up because company executives are upset about a professor and a guest lecturer who raised the issue of “alternative agriculture” methods with which the executives disagree.

Survival of the fittest

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