Wednesday, August 12, 2009

UCB and Problems with MIchigan Model

by Chris Newfield
I agree with Hollinger that the Michiganization of UCB should not be dismissed out of hand, and with a milder version of what he says about the Futures Report, which is that a deeper study of that case needs to be done (we had real trouble getting historical data on UM). The debate at Berkeley won't move forward until a real study is done. But such a study would need to be done with real rigor about UCB's actual costs and funding sources, including its higher-than-system-average share of state GF and the dependence of its professional schools on even larger subsidies. The public also needs to be told very clearly about the implication: all other things being equal, UC as a system would reserve fewer spaces for California students, and even fewer of them would go to Berkeley than they do now.

I don't think there's any direct personal benefit to UCB faculty for being part of the UC system, except for pension and benefits. Faculty make their own relationships and could do this with Cal State Davis just as easily as UC Davis. So simple personal self-interest isn't a good argument for keeping Berkeley in UC.

On the other hand, there is an institutional benefit. UCB benefits budgetarily by being in the system because it gets more money per student FTE from the state than do all but 2 other campuses (both medical) - see the attachment, from a UCPB project I started that ran out of time before we could clean the numbers. This is the result of the 1996 "block grant" budget change that grandfathered in the old system of giving much more money per grad student than per undergrad, so the high-grad campuses benefited enormously (esp UCLA).

Michigan: a very mixed bag for Michigan and may not be duplicable for Berkeley EXCEPT on bad budgetary terms. Considerations:
- the Regents don't have the guts to raise fees to Michigan levels and keep raising them. So the only meaningful revenue stream won't be big enough.
- they don't have the guts for one good reason: increasing tuition a lot will reduce GF by a lot. The "backlash" happened in Michigan and it has been very bad recently.
- U Mich had virtually no competition for higher ed research subsidy dollars in its entire state (MSU is more complementary than say UC Davis is to UCB). UCB just isn't in a comparable position in California.
- the privatization model is also broken - faculty really need to notice this. When you start down that road, you need to compete with your new rich peers to attract "blue chip" students with "merit-based" scholarships, intensify star-system bidding for faculty, bloat your non-teaching staff even more (better student services, more development people, more industry liasoning, etc. etc.) and have new Duke-like facilities rather than student centers that starred 45 years ago in documentaries about the free speech movement when they looked a whole lot better. Costs go up, as do tuition discount rates. All this likely means little or no net revenue increases. As to increases in non-resident tuition - I still haven't had time to do the figures, but I see small improvements on the margins of campuses of whatever size.

I encourage faculty to go far enough with the privatization scenario for Berkeley such that they actually run the numbers - at the UC GF average, not Berkeley's built-in advantage, with demand elasticity models that account for how increased price will affect demand, with a model for impact on diversity and Pell Grant students, and with proper accounting for "customer" expectations at the new price point - smaller classes, more office hours, better technology, nicer buildings, windows that get washed, etc.

Rather than taking the longstanding Berkeley position during downturns - well, we'd like to leave UC, which holds Berkeley back, but well, ok, we'll stay as long as you acknowledge what a burden this is for us by giving us something (grandfathered grad-based GF shares in 1996, higher fees in 2010?) - why not do the full modeling of the new Cal Berkeley, starting with the simple proposition that it not lose its GF, and would stay public in that sense, but would go forward with the system average GF per student? Berkeley would then work with all its current assets and liabilities - reputation, location, more self-determination, etc.; also a law school whose costs Edley has raised quite a bit, BLNL, an expensive CalISI that has never broken even, growth restrictions and enrollment caps, a physical plant to be compared to Stanford and MITs and not to UCLAs, etc. There are many unknowns, Hollinger et al rightly point out, and a study would help reduce their number. Your Senate's budget committee would perform a real service here. People who are in a position should ask for the spreadsheets that will show how the money really does flow. In my experience chairing UCPB, you're likely to run into the kind of discourse "we in administration have tried to understand our own accounting systems and can't," but you should keep trying. The big skeletons in the closet include: 1) student fees subsidize the indirect costs of research (I don't agree with Schwartz's philosophical hypostases of the categories but his figures are a good starting point); 2) campuses subsidize the professional schools. And there are no doubt others.

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