UniversityProbe.org – a critical forum on Research Universities, their finances, their governance, …, their future

by Velma Montoya, Ph.D., UC Regent-emerita

Peter Schrag’s profile of UC president Mark Yudof in San Francisco Modern Luxury deserves an A grade for keeping Yudof happy.  This article could have benefited from enhanced reporting.

First, the Regents never “came calling” to Yudof in Texas.  It is solely UC Regents Chairman Blum who did so.  Blum essentially imposed Yudof on the Board.  Blum meant well, but a number of Regents resented this imposition.  And Yudof made little attempt to overcome this resentment.  Some very powerful Regents were offended that Yudof did not reach out to introduce himself to them.  (In contrast, when Robert Dynes became UC President he made a point to meet and learn the concerns of every Regent on his/her home turf, showing up for lunch with me at the Hollywood Roosevelt Hotel even though I had only about a year left in my term).  And now that Blum is no longer Chairman, some Regents admit they were unwilling to confront Blum’s method or choice of Yudof because they wished to remain in the good graces of Blum’s U.S. Senator wife.

Second, there’s lots of contrary evidence that Yudof left Minnesota and Texas universities “bigger and grander than when he came.”  In particular, Minnesotans were happy that Yudof’s leavetaking meant they could finally find a university president who would consider building them a football stadium, and a quick search of University of Texas professors’ association sites offers myriad reasons why they were happy to see Yudof go.  The Texas professors’ sites also predicted a lot of Yudof’s managerial problems at UC.  In other words, evidence here is mixed.

Third, after Dynes was sidelined, UC Provost Wyatt R. Hume served as Acting UC President for almost a year.  It is Hume who led and managed the downsizing of 450-plus people in the UC Office of the President.  Hume made a number of presentations to the Regents during that period about how he was downsizing UCOP.   Indeed, Yudof currently is being criticized for adding back a number of high-paid positions to UCOP.

Fourth, how can Schrag label critics of UC administrators as populist opportunists?   I believe UC Berkeley professor-emeritus Charles Schwartz is sincere in his claims that undergraduate student fees cover undergraduate student education, although I disagree with his finding and methodology.  And UC Santa Cruz Professor and President of the Council of UC Faculty Associations Robert Meister is absolutely correct in reporting that UC has pledged student fees in the repayment of construction bonds.  Whether this is proper or not, I do not know.  UC administrators stonewalled Meister before presenting him with limited answers concerning this practice.

Fifth, I disagree that Yudof inherited an UC administration that was disengaged from the process in Sacramento.  In the opinion of many Regents, UC President Atkinson, External Affairs Vice President Darling and UC Sacramento Office Director Arditti were overly solicitous to Legislative requests.  Apparently Yudof and Schrag are ignorant of the Latino legislators’ leverage over numerous changes in UC admissions policies over the past decade.

Sixth, Yudof’s current push for the federal government to save public research universities is contrary to Yudof’s published statements attributing diminished state support, first, to the aging of the U.S. population, as resources are shifted from education to senior citizens’ other areas of interest, such as health care and security, and, second, to globalization, as multi-national corporations become less tied to specific geographic locations and thus less interested in developing well-educated, local workforces.[1] These arguments explain why UC’s advocacy requests for increased funding from the California Legislature yield limited results.

Finally, like Schrag I find Yudof personally engaging and smart.  And, like Schrag, I question whether UC — and society — can afford a law school at UC Irvine.

[1] Mark Yudof, “Higher Tuitions:  Harbinger of a Hybrid University?,” Change Magazine, March/April 2002.

WHAT DO WE (UC faculty) DO NOW?

Charles Schwartz, UC Berkeley

Rather than just waiting for delivery of the Governor’s proposed increase in funding for higher education, the University should engage in some needed fiscal reforms to convince the rest of the state that their reinvestment will be well spent. Foremost is a need to clean up some bad habits of the UC administration; and such reform is unlikely to come from the top. So here is a worthy campaign for the faculty to take on.

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In the ongoing controversy over how the University of California uses student fees and other monies to back up the bonds it sells for construction projects – a new letter from UC’s Chief Financial Officer answers one question and exposes severe shortcomings in executive oversight.

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TO:  The Working Groups of the UC Commission on the Future
AT: Their public Meeting on the Berkeley Campus, December 3, 2009
FROM:  Charles Schwartz, Professor Emeritus    Schwartz@physics.berkeley.edu

For Your Consideration, I submit the enclosed proposal:

A BETTER PLAN FOR THE FUTURE OF THE UNIVERSITY OF CALIFORNIA

3 pages summarizing this comprehensive PLAN, followed by 20 pages of relevant background material from my recent seminar on this topic.

In submitting this proposal, I request a thoroughgoing review that will produce a critical response: first identifying any faults you may find in my assertions of fact or logic; then offering whatever opinions you may develop about the feasibility and desirability of the changes that are proposed. That is the caliber of work we expect in the University.

The overall concept of this PLAN is to seek a partial renewal of state funding for the University of California together with substantial changes in the way that UC handles the money it receives. This approach (“walking on two legs”) should be the best way to bring the University and California together again and thus avoid the perils of UC either decaying from its preeminent academic standing or abandoning its invaluable public character.

To be perfectly frank, these proposals do step on the toes of certain factions of the University, namely, the Board of Regents and their chosen executives. But, please remember, our primary goal is to preserve the University, this center of great learning in the service of the public good.

I will be happy to provide an electronic copy of this presentation, so that it can be posted on the central website of the Commission for any interested persons to access.

Thank you,

Charles Schwartz

The PLAN is also posted at  http://socrates.berkeley.edu/~schwrtz

Public Comments to the University of California Commission on the Future

meeting in Oakland, CA, November 12, 2009

by Charles Schwartz

Having sat through two of your public Commission meetings, the most interesting thing I have heard was the presentation at the beginning [today] by Mr. Baldassare [Mark Baldassare, President of the Public Policy Institute of California], who connects to the world of the people of California.  And his most interesting comment was his response to a question from Mr. Pulaski.  I hope I am quoting him correctly.  Baldassare described the people as having mixed views about higher education and the University. He said: what the people want from higher education is efficiency, responsiveness and accountability.

Now I know the President’s Office uses those words a lot. They have a program for accountability.  I have looked at a lot of the stuff that they have put out there. And I judge it to be primarily a public relations job; and I think most people see it as that. And therefore it fails to provide the people with what they say they want.

Let me give you a few examples. A familiar cliché: student fees go up; and the educational services that we provide to the students go down.  Standard excuse: It’s Sacramento’s fault.  No, that doesn’t wash.  We take in a billion and a half dollars this year and two billion dollars next year of Educational Fees.  How are you spending those monies?  Nobody can find out.

There is a lively controversy between Professor Meister and Vice President Taylor.  There is no transparency there. It is a PR game.  You can’t win friends that way!

Another example, from my own research:   The fantastic growth rate of administrative bureaucracy throughout this university. It’s been ignored, ignored, ignored for a long time. Well, maybe there will be some progress made on that now.

I think it would have been a wonderful thing if there were a Working Group appointed whose job was to bring forward specific critiques aimed at the top administrative structure, and that would include the Board of Regents, the President and the Chancellors and that whole non-academic activity; how is it funded; where is the money going; what’s going on?

Now, of course, since you are the people who created this structure, it wasn’t likely that you would appoint such a working group. But there is an idea.

Thank you.

[The letter that follows was inspired by the work of Bob Meister, posted at
http://www.cucfa.org/news/2009_oct11.php ]

Department of Physics
University of California, Berkeley
Berkeley, CA 94720
October 15, 2009

Regent Fred Ruiz, Chair, Committee on Compliance and Audit
Regent Monica Lozano, Chair, Committee on Finance

Dear Regents Ruiz and Lozano;

I write to convey a concern, which is shared by a number of my faculty colleagues, regarding a lack of information about the relationship between student fee revenues and the University’s debt service activities. It is unclear, at this point, whether this situation might be a lapse in the exercise of fiduciary oversight by The Regents or merely a failure to provide the Accountability and Transparency that has been promised by the President.

In 2003 The Regents adopted a new arrangement for increasing its overall debt capacity. A General Revenue pool was established for financing most of the campus-based capital projects and a separate Medical Centers pool was established for that set of enterprises. A particularly novel feature was that student fee revenue was to be included in the General Revenue pool – in fact it is the largest component therein.

As I understand the University’s policy, each campus-based capital project that requires external borrowing, via loans or bonds, must plan on providing the necessary debt service through the specific revenue stream that the individual project is intended to provide. The bulk of the General Revenue pool is “pledged” as a backup source of debt service, for use only in case of default by that primary cashflow. [See, for reference, the “Annual Debt Capital Report to The Regents”, Fiscal Year 2007-08, at the bottom of page 7.]

The question that has arisen is whether student fee money is being used or may be used as a primary source of debt payment on some construction projects (other than certain capital projects that are explicitly to be funded by the student Registration Fees.)  The immediately troubling situation is that I have been unable to find an answer to that question for campus-based projects.

By contrast, I have looked at the last annual Financial Reports of the University’s five Medical Centers; and there I find, for each entity, a table of annual values for their “Debt Service Coverage Ratio.” This is a most instructive datum: the net operating revenues divided by the scheduled payments of interest and principal on outstanding long-term debt. The numbers published for FY 2008 are, 2.5, 6.3, 2.2, 7.8, and 4.2  – showing a very healthy financial condition with each medical center easily handling its own debt service obligations without having to be bailed out by the other members of that pool.

Is there any such data to be found for the campus-based capital projects?  I have looked at several published reports and made specific inquiry to a knowledgeable person at UCOP; and the answer appears to be, No.

I find this shocking; and I therefore write to you for resolution of this problem.

Sincerely yours,

Charles Schwartz
Professor Emeritus
schwartz@physics.berkeley.edu

CC:
Regent Russell Gould, Chair of the Board
Student Regent Jesse Bernal
President Mark Yudof
Senior Vice President Sheryl Vacca

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Here is the latest official tabulation of the various kinds of Student Fee revenues for the University of California.  This comes from the “2009-10 Budget for Current Operations, Budget Detail” (henceforward, the “Budget”), published November 2008 and available at http://budget.ucop.edu/pubs.html.  The table on page 174, titled “Income and  Funds Available,” gives this data as Proposed for 2009-10.

Table 1. UC Student Fee Revenues for 2009-10

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Follow the Pay Cuts at UC

by Charles Schwartz, UC Berkeley

• One University or None (July 9)

• Yudof Makes Some Changes (July 12)

• Looking Ahead (July 12)

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Financing the University — Part 19

UC President Yudof’s Nonsensical Plan for Salary Cuts

by Charles Schwartz, UC Berkeley

A dramatic proposal from UCOP (University of California Office of the President) designed to deal with the University’s Financial Emergency doesn’t make sense when you look into the numbers. Happily, we are able to show how one can achieve the same goal while saving all employees a lot of money.
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