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UC forms commission to discuss going private By Ravi Doshi Sept. 28, 2009 at 4:42 a.m. The University of California system is often considered one of the best systems of higher public education in the United States.
In addition to producing nearly 55,000 graduates and seven percent of Ph.D.s annually, UC spends more than $4.5 billion on research annually, developing industries and scholarship ranging from biotechnology to communications.
Beyond its academic contributions, the system serves to oil the California economic engine, employing nearly 400,000 Californians statewide, and contributing nearly $14 billion in economic activity to the state annually.
But, in recent years, the fiscal woes of the state have forced drastic cuts to the public's contribution to the UCs budget and operations. Since 1990, the state of California has spent 40 percent less per student, and in the last two years alone, has reduced its support for the system by $813 million – a nearly 20 percent cut.
Such reductions have forced increases in student fees and class sizes, decreases in faculty salaries and recruitment efforts, and more broadly, have many questioning the state's commitment and ability to support the higher education system.
"The candid truth is that the state of California has become an unreliable partner and has been an unreliable partner for years," said UC President Mark Yudof in a meeting earlier this month.
Such sentiments have generated discussions of the continuing relationship between the state and the UC and have many exploring new options for the sustainability of the system, including the possibility of privatization.
UC Commission on the Future
Over the course of the next few months, the discussion of the relationship between the state and the UC may be especially prominent in meetings of the recently formed UC Commission on the Future.
The 24-member commission, which held its first meeting in early September and is composed primarily of university administrators, faculty, staff and students, is charged with crafting a new vision for the university given its mission and budgetary needs.
To assist the process, its members will serve on five working groups, which will focus on the size and shape of the UC, its education and curriculum, access and affordability, and funding and research strategies, respectively.
"What's going to come out of this are concrete ideas as to how to move forward given the new political climate in the state. (The commission) should serve as a tool for the legislature to see what has happened to the UC, and hopefully, spark a renewed vision and relationship between the state and the higher education system," said Victor Sanchez, president of the University of California Student's Association, and a member of the commission.
While the working groups have not yet begun to meet, they are expected to deliver their findings to the UC Regents at their meeting in March.
Until that time, members will discuss a variety of approaches and solutions, including examining those implemented at other university systems across the nation.
"There is no set agenda for what will come out of the commission. The idea is to bring people – primarily from the UC community – together, to see what the UC needs to do in the long run to maintain access, quality and affordability," said Steve Montiel, media relations representative for the UC Office of the President. "Everything is on the table."
Privatization: The "Michigan Model"
One option that the commission will likely examine is the proposal to move the UC away from dependence on the state through a method of privatization popularly referred to as the "Michigan Model."
"We ought to move in a direction where the state provides a subvention to the university, rather than appropriating funds for them. So, (the university) enters into an agreement with the state as essentially a private institution, but as sort of a public-private corporation," said Chancellor Emeritus Charles E. Young.
Under the model, increases in student fees and out-of-state student enrollment – offset at least partially by corresponding increases in financial aid – would be used to further fund the system. These actions, coupled with increased fundraising from external sources, would theoretically, according to proponents, provide the university system with the means to rely less on financial support from the state.
With such decreased reliance on state support would come increased autonomy for administrators on individual campuses to determine how to spend resources according to campus needs, and the ability to take actions that could result in student fees being adjusted on a more stable and predictable basis.
"In theory the UC is independent, but it almost always acquiesces to whatever the state says. The ultimate control the state has is the control of the budget – if you don't do what we tell you, we'll cut your budget – so the university does what they are told. (Privatization) would get us away from that," Young said.
Other Options
Despite its implementation at other public university systems across the country, including the Universities of Michigan and Virginia, the "Michigan Model" of privatization is not without its controversies.
Opponents have cited higher rates of student fees, as well as decreased accessibility for in-state students, and the drop in college ranking of the University of Michigan from No. 8 in 1987 to No. 27 this year, in the often cited U.S. News and World Report rankings, as evidence of the failure of the plan.
"(Privatization) is the worst idea California has ever conceptualized," said Lt. Gov. John Garamendi, who also serves as a Regent for the University of California.
For Garamendi, and others like him, the answer lies not in a break between the UC and the state of California, but rather, in increased investment on the part of the state to the higher education system.
To that effect, Garamendi has proposed the creation of a permanent higher education fund for the state, similar to the fund used in the state of Texas, and funded largely by tax revenues on oil producers.
Such a bill was proposed earlier this year in the California State Assembly by Majority Leader Alberto Torrico (D-Fremont) and is argued to be able to generate at least $500 million for the state, annually.
"California is currently the only place in the world that gives its oil away for free to the oil companies," Garamendi said.
And while a tax increase of this nature would face the structural challenges of the California system to change tax policy, proponents believe in its viability.
"The question for California is, are we as Californians willing to invest half of 1 percent of our annual wealth in the one most important economic and social development tool we have – higher education. I believe Californians are willing to do that," Garamendi said.
If not, Garamendi, Sanchez and others argue, at stake will not only be the higher education system of the state, but more broadly, its full economic and social potential going forward.