Berkeley Grad Student Calls on Regents to Audit Use of Ed Fees

My name is Annie McClanahan, and I’m a graduate student and instructor at UC Berkeley. I’m here to urge you to respond to CUCFA and AFSCME’s requests for an audit of the use of student fees as collateral for construction bonds.

There have been a lot of numbers thrown around today, but I want to add one more, albeit one with a rather different resonance. At the beginning of the semester, I visited a handful of undergraduate discussion sections to speak with students about the budget cuts and the protests against them. In every class, I began by asking students to raise their hands if they thought they might not be able to come back the following year as a result of the fee increases. In every class, nearly half raised their hands. In one class, a student kept his hand up. “My parents already told me they couldn’t afford it,” he said. “But what can I do—I’m a junior, and already halfway through my degree. The next increase is coming halfway through the academic year—what can I do? I’m gonna take out loans, my parents are gonna take out loans—I just don’t know what other choice I have at this point.”

For students like this, the importance of affordability is straightforward. But we’re here today to discuss something even more straightforward than affordability: accountability. We’re here today to call on the Regents to make the UC accountable for decisions made in recent years, for decisions made during this fiscal crisis. I’m here today to ask you to prove to the students of the UC system, and especially to those students who raised their hands in answer to my question, that the additional fees they are paying this semester as well as any additional fees they may have to pay in the future are actually spent on their education. I’m here today to tell you that when that student and his parents have to pay 40% more over the course of a mere 18 months for an institution their own tax dollars built, that is effectively a tax increase on California’s middle class families. I’m here today to tell you that when that student and his parents have to borrow at 8 or 10 or 14% interest so that the UC can maintain its credit rating and its ability to borrow at a .2% lower rate of interest, we the students are not only collateral, we are collateral damage.

I’m also here to tell you, as both a student and a teacher in the UC system, that we care infinitely more about instruction than construction. To demonstrate that, let me tell you another story. Last year, when the budget cuts to first forced my department to slash the numbers of introductory writing classes, I entered my classroom on the first day of the semester to two surprises. First, I noticed that in my small seminar room, as in every single one of the dozens of such rooms in my building, there was a brand new, elaborate media system. Rather than pull down the video screen, I could now just push a button; rather than going to borrow a projector from the media center in the building next door, I could hook my computer up directly to the console. The lights all had complicated dimmer switches. The second surprise was more unpleasant: my classroom was wall to wall with students. I had come to expect a handful of waitlisters to show up on the first day of my class, which is a university-wide requirement. But this time was different—I had twice as many students in the room as I had room on the roster. I told them they wouldn’t get into the class, but most of them stayed. One by one, they came up to me after class and told me their stories—they had been trying for two semesters to get into this class, they had to take it to graduate, they had already been refused admission to three other sections that day and this was their last chance. Standing next to thousands of dollars of fancy new equipment which I knew I would use only once or twice that year, I had to tell each of them no, tell them I was sorry, tell them that there had been cuts this term and thus were fewer classes and fewer spots in those classes. It was the hardest day of the semester.

Some in the UC administration have suggested that students and faculty should take our case to Sacramento, to the governor and the legislators and ultimately the taxpayers. They have suggested that we, the students and faculty, should be accountable for making that political case. And they are right: we should. But we can’t do that until you are accountable, until your accounts are made public. We can’t go the taxpayers and ask them to help us out of this crisis unless we can trust that the UC’s priorities are the same as ours. We can’t go to our parents, our spouses, our families and ask them to help us pay an additional 40% this year unless we know with absolute certainty that that money is going solely to our education. We can’t take out more and more and more loans unless we know that the leaders of this institution have proved to us and to the citizens of California, that they are honest, that they are transparent, that they deserve our trust and our hard-earned money. I’m asking you to become—today—leaders like that. I’m asking you today to be accountable.

Berkeley Faculty Association Head Calls on Regents to Audit Use of Ed Fees

I am Christine Rosen, the Secretary of the Council of UC Faculty Association (CUCFA). As Bob Meister just said we are requesting that you conduct an audit to determine whether the Office of the President is violating its own rules by using student educational fees to for debt service on its construction bonds.

As part of this audit, we would also like to request that you audit UCOP’s assertion that this debt is actually being paid out of the revenues generated by the revenue generating programs that are housed in the new buildings. We question whether most of these programs can generate enough revenue to service this debt. To give you an example of why we are concerned:

Berkeley is in the process of constructing a $136 M Student Athlete High Performance Center and is about to begin a much larger $321 M renovation of the football stadium. The Department of Intercollegiate Athletics (DIA) is the revenue generating entity responsible for repaying the $457 M debt. Assuming a 4.8% interest rate, it will have to pay out $22M a year.

However, the DIA operates at a large multimillion dollar loss every year. A faculty group looking into the matter has discovered for the most recent 5-year period for which the DIA has released detailed data (2003-08), its cost to campus has been at least $10 million every year - except for 2007-08 for which the cost was $7.4 million [Note 1]; and that for the most recent fiscal year (2008-09), the cost to the campus is expected to be a record high of approximately $13.5 million [Note 2].  The $22M debt service burden is going to come on top of this ongoing loss, creating at least a $33M shortfall per year. The faculty have heard that DIA needs to sell at least half a billion dollars worth of expensive skyboxes to generate the money to cover these costs. We question whether it will be able to sell enough to generate revenues of $33 M a year. Even if by some miracle it can do this, we want to know how the interest on $136 M debt incurred to construct the high performance athlete training center will be paid off during the years before the renovations to the football stadium are completed. Where will this money come from?

This is just one example of a revenue generating program that seems unlikely to generate the surplus funds needed to pay off the university’s debt. We suspect that many of the revenue generating programs assigned responsibility for paying off construction debt are incapable of shouldering the entire debt service burden placed them. Please audit all such projects to determine what level of debt service the Regents can realistically expect such revenue generating programs to generate for this purpose.

In addition, please audit the revenue flows that the Regents can realistically expect extramural research grants to generate to contribute to the general revenues that UCOP is pledging as collateral for its construction debt and/or that it may be using to service this debt. We doubt that it is capable of generating enough revenue to relieve the university of the need to divert funds from student educational fees for this purpose.

Finally, let me tell you why conducting these audits is important. If in fact UCOP is diverting revenues from student educational fees to pay for debt service, this diversion is coming on top of the recent, devastating state budget cuts to instruction. So it is coming at a great cost to our students as well as to our capacity to maintain the university’s reputation as a world class institution. It is part of the reason why departments have had to slash course offering, increase class size, cut back on funding for Graduate Student Instructors and graders faculty need to support their ability to teach gigantic classes effectively. It’s part of the reason why students restrooms are being cleaned even less than in the past and are in increasingly horrible, unsanitary shape and why garbage is not getting collected and why departments are pulling out faculty phone service. It has to be recognized that it helped necessitate the furloughs and layoffs that have demoralized faculty and staff and undermined UC’s ability to retain its best faculty.

We’re told that the new buildings are an investment in UC’s long term future as a world class university. That may be, but in an era of financial crisis, diverting funds from student fees for this purpose means we are disinvesting in our students and our faculty – which is an even more serious threat to the university’s future.

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Note 1: Computed from UC Berkeley Senate CAPRA estimates and DIA financial statements as shown on: http://budgetcrisis.berkeley.edu/?page_id=16
Note 2: The DIA has not provided detailed financial information for the 2008-2009 fiscal year; only this estimate.