The Perpetual Funding Crisis

Funding for state universities and colleges in California has become an increasingly prevalent issue, especially throughout the University of California system. Over the past few decades, costs have risen due to inflation while aid and funding from the state have diminished. Throughout the UC system, money continues to prevail as an issue of utmost concern, becoming a contentious topic for students, faculty, and university and state officials alike. Negotiations for funding, headed by UC President Janet Napolitano and Governor Jerry Brown (D-CA), have transformed the “financial crisis” into a situation governed by political motives. Most recently in May of 2015, the Napolitano-Brown months-long standoff over state funding and tuition hikes serves as a microcosm of the perpetual disinvestment of the state on the iconic UC system and higher education.

Figure 2: UC Sources of Funding
Figure 1: UC Sources of Funding. Source: Regents of the University of California

During the political impasse, Napolitano remained adamant in imposing tuition raises unless more funding was provided by the state; Brown vouched for a no tuition raise without providing additional funds. Eventually, the two parties settled on a two year in-state tuition freeze, but an 8% tuition increase for out-of-state students over that same span. The two sides also agreed on a 4% increase in state funding for the UC system in each of the next four years. Although such initiatives are steps in the right direction, state investment in higher education has been poor over the past decades. In a study conducted by the non-partisan group California Budget Center, state funding over the past 30 years has decreased dramatically by over 12.8 % for the UC system to about $10,879 per student in 2013-14. In addition, state funding today only accounts for approximately 10% of the entire UC budget.

Figure 3: Decline in Funding
Figure 2: Decline in Funding; Source: Department of Finance and US Bureau of Economic Analysis

The perpetual funding crisis may continue to adversely effect the strength of the UC system, deterring students from the top flagship campuses of LA and Berkeley, losing top talent to rival institutions. Funds directly affect endowment returns, a key measure of alumni strength (due to donations) and campus resources. According to US News, public institutions such as the University of Michigan—Ann Arbor ($9.6 billion) and Texas A&M University—College Station ($10.5 billion) have the largest public university endowments (by campus). Comparatively, according to the UC Berkeley’s Office of Communications & Public Affairs, Berkeley—the top-ranked UC campus—has a total endowment of only $4 billion, with the state of California only contributing 13% of the campus’ revenue (FY 14-15). As a matter of fact, state contribution to the UC system is about as much as the revenue that comes in from alumni and donor contributions ($462.5 million) during that time span. Not to mention, the top private institutions continue to have endowments much greater than that of public institutions. In fact, the whole UC system (across 9 campuses) only boasts a total endowment of $11.2 billion.

Yet even though it has one of the worse endowment returns among top ranked universities in the U.S., the flagship campus of Berkeley continues to strive well academically, ranking 20th in the 2015 U.S. News National Rankings and 3rd in the World Rankings. However, the dedication from students, staff, and faculty to raise the UC system into a world-class, well-reputed university is not enough to trump the evident deficiencies inflicted by a lack of net money entering the school system. Campus resources are outdated and classroom materials are minimal. Several Berkeley campus real estate projects have been withheld due to insufficient funds. Campus buildings with a poor seismic rating, such as Tolman Hall and Davis Hall have yet to be seismically retrofitted. This should be of maddening concern to students, faculty, and university officials alike, especially in a seismically-active region like Berkeley, which lies directly on the Hayward Fault that is due for a 6.7+ magnitude earthquake anytime.

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UC Berkeley; Source: berkeleyside.com

How can the state of California continue to boast one of the best universities while addressing the clear lack of funding throughout the entire UC system?

At the heart of the funding problem is the imprudent allocation of funds in the past and present.

Figure 1: How UC Funds Are Allocated
Figure 3: How UC Funds Are Allocated; Source: Regents of the University of California

Instead of addressing holes in undergraduate instruction—acquiring more equipment for even the most basic demonstrations in science classrooms—the university continues to concern itself over defraying pension costs, with Gov. Brown agreeing to increase $436 million over 3 years to UC’s pension fund. Instead of hiring more distinguished faculty or even increasing the salaries of professors—a recent study by UC estimated that the professors’ pay lags behind by about 12 %—Gov. Brown has suggested cost-cutting efforts such as increasing online courses and class sizes.

But that’s not prudent investment in higher education. That’s not the type of mindset that will maintain the high reputation of the University of California. That’s not the way to enable that the flagship campuses of Berkeley and LA can compete with the other high institutions in the world—like Stanford and MIT.

Recognizing how indispensable teaching is to the strength of the university, Napolitano must take charge as a leader by endorsing the hiring of more faculty and the increase of course offerings to over-populated student bodies. Lowering the student-to-staff faculty ratio should also be prioritized.

To improve funding, there should not be a freeze on tuition hikes for all students. In addition, out-of-state enrollment at the top campuses of UCLA and UC Berkeley cannot be capped. More out-of-state students will only aid the university, as out-of-state students generate an additional source of revenue by paying twice the amount in-state students must pay.

In fact, higher tuition must be imposed. It’s simple math. Higher revenue will lead to more money for spending. For the pundits who argue tuition is too high, they must consider that quality education comes at a cost. The ‘more accessible’ argument doesn’t add up. 

Brown claims the UC system should be ‘more accessible’ to Californians by accepting more Californians and keeping tuition low for in-state residents who ‘pay state taxes’. However, this is simply a political ploy to keep his constituency support throughout California, where many residents have wanted to study at the top UC campuses of UCLA and Berkeley. But the reality that CA residents must understand is that top level institutions simply cannot accept everyone who wishes to attend. Think about how many of high school seniors around the nation would be ecstatic to attend Harvard or MIT.

From another perspective, although the flagship campuses of Berkeley and LA may not accept more Californians, there are seven other UC campuses in which Californians can be admitted. With their higher acceptance rates, they could account for the in-state losses from Berkeley and LA, and the numbers offset. Aside from the monetary perspective, more out-of-state students only increases the diversity of the Berkeley and LA campuses. Bringing people from different walks of life would only increase the collective intellectual ability of the campus population.

At the end of the day, Californians and state legislatures must understand that higher education is a whole different ballgame. If you want quality, well-reputed academic and research opportunities at the flagship universities, sufficient funding is essential. There must be a certain level of sacrifice for higher funds, whether it be enrolling more out-of-state students or increasing tuition.

Higher education is important to the lives of many, and adequate funding is crucial to maintain the quality of top-level academics. Don’t play politics with the education of over 160,000 students.


For more information on the how UC funding has diminished over the past few years, click here for a report conducted by the non-partisan organization California Budget Project (CBP).

For a more in-depth analysis of the UC state budget, click here.

Featured image source: berkeleyside.com