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Higher UC tuition or more state funding — where would state funds go?



Tuition increases and more state funding are at issue as Gov. Jerry Brown and University of California President Janet Napolitano debate funding for the university system.
Tuition increases and more state funding are at issue as Gov. Jerry Brown and University of California President Janet Napolitano debate funding for the university system.
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There’s a tug of war between California’s governor and the president of the state’s prestigious University of California over nearly $100 million in additional state funds the university system argues it needs next year.

For his part, Gov. Jerry Brown believes university officials should make do with his planned 4 percent funding increase of $119 million for 2015-2016.

UC President Janet Napolitano, herself a former governor, counters the university system needs at least $97.7 million more, on top of the 4 percent increase, to maintain the university system's high quality and open the university to more California students.

Napolitano’s request comes with an "or else." If the state doesn’t pony up the extra funds, she plans to carry out tuition increases of up to 5 percent in each of three years.

The tuition hikes would dissolve an understanding between UC and the governor to freeze student tuition. The governor promised that tuition would not be raised when he campaigned for a 2012 state tax increase to help fund education.

Both sides spent a significant part of a November UC regents meeting discussing how the public university would use extra funds from tuition hikes under a $459 million spending plan for the next school year. 

“With this plan we can invest in faculty," Napolitano said. "This means we can increase course selection, course availability. We can speed time to graduation, and better support graduate as well as undergraduate education.” 

Specifically, the UC 2015-2016 budget calls for expenditures of $94.9 million for financial aid and enrollment growth that includes 1,025 new resident undergraduates at each campus; $60 million to reduce student-faculty ratios and close faculty salary gaps, among other issues; $125.4 million for mandatory expenses that cover retirement plan payments, health benefits and other required compensation; and $178.7 million for high-priority costs such as planned compensation increases of 3 percent, deferred maintenance and capital improvements.

Taken together, the salary and benefit costs along with the projected compensation increase amount to over 51 percent of the spending plan. Still, the nonpartisan think tank, Public Policy Institute of California, said it concluded faculty salaries and benefits for both the UC and California State University systems have not increased significantly over the past 20 years.

Instead, the institute said recent tuition increases have been driven by significant reductions in state support for higher education. Analysts at the California Budget Project found UC tuition and fees paid by students and parents have more than quadrupled since 1990-1991, while state general fund spending per student has recently been at or near its lowest point in more than three decades.

Brown, who sits on the regents board and attended the November meeting, contends the UC system hasn't been frugal enough. “I don’t think you considered alternatives to the structure over time that could actually lower your costs while increasing access and improving quality," he told the UC regents.

Where would the money go?

If President Napolitano carries out the tuition increases, UCLA officials said their campus would get about $38 million in additional funding next year. Its resident undergraduate tuition and fees, currently $12,192, would rise to as high as $15,564, although 55 percent of California students get free tuition through financial aid and scholarships. 

Hiring faculty is at the top of campus administrators' needs list.

“We’ve committed $53 million dollars in state money, tuition money, and other university sources for support of this increased demand of undergraduate teaching,” said UCLA Chief Financial Officer Steven Olsen.

“We do need that in order to make sure classroom sizes are not too large in terms of the number of students and we have the type of quality and the numbers of instructors needed to make sure students are making progress toward their degrees,” he said.

UC campus officials are preparing two scenarios. Under one plan, they would receive the already proposed $119 million from the state and at least $97.7 million from next year’s student tuition increase.

Under the second plan, if tuition hikes do not materialize, the university will receive only $119 million from the state. For UCLA alone, Olsen said it amounts to about $16 million next year. That scenario, the university contends, would mean fewer seats for in-state students, fewer dollars for financial aid, delays in graduation, and a negative impact on the quality of education.

What if UC lives with smaller budget

The governor insists the UC system can live with the increase it’s already on track to receive under his preliminary budget plan.

“The governor is a supporter of higher education and has committed for the past two years to guaranteed year-over-year increases in general fund support of UC and CSU,” said Brown’s finance spokesman, H.D. Palmer.

Palmer said the funding plan Brown and UC agreed on increases the university system’s funding by $510 million from the 2014 through 2017 fiscal years.

Preliminary State Funding Plan for UC System

Year % Increase Dollar Increase
2013-14 5% $119 million
2014-15 5% $142 million
2015-16 4% $119 million
2016-17 4% $124 million

Source: California Department of Finance

It’s a generous increase, Palmer said, because the growth compounds over the years. For example, in 2014-2015, UC continues to receive the previous year’s $119 million increase and the additional $142 million.

At the November meeting, UC administrators painted a dire picture if the university is held to the governor's 4 percent increase in state funding for each of the next two years.

President Napolitano said she considered alternatives to the tuition hikes, among them increasing enrollments of international and out-of-state students; capping or cutting California student enrollment; reducing financial aid; and "reductions in faculty and course offerings that would make it more difficult for students to graduate in four years.”

The university’s own spending plan calls for undergraduate enrollment of California students to grow by 3,000 students by 2018. But UC would turn down over 15,000 in-state students by the same year if it receives no additional funds other than those planned.  

In recent years, UC has increased admissions for out-of-state students — who pay significantly more tuition — to offset reduced state funding. It could do so again if it fails to get the sought-after state funding. 

As for Brown's call for belt-tightening, administrators detailed how, at the governor’s request, UC found $660 million in cost savings throughout the system by reviewing such items as employee benefits.

Brown liked what he heard, but said it wasn’t enough and called for more reductions.

At UC Irvine, departments feel the pinch

For some faculty, the governor's continued insistence that there's more to cut, doesn't square with reality.

“We’re being incredibly frugal with our resources,” said Alan Terricciano, UC Irvine dance professor.

“You can peel away layers of support until you get to the bottom layer, but once you peel that, there’s no support at all, you just have to stop. I don’t think the understanding is at all there how close we are to that.”

His department hasn’t laid off faculty, but he said cuts to the department’s operating budget pushed faculty to dig into their own pockets to find ways around the reductions.

Terricciano is donating his $11,000 stipend for serving on UC Irvine’s Academic Senate to the dance department. The money will be used to hire musicians to play during dance instruction. Live music is what helped convince him to take the faculty job two decades ago, Terricciano said, but it slowly faded away from instruction.

Waiting for the next moves

Next week, Brown is set to release his newest state budget proposal, including any revisions to his thinking on UC funding. 

In the meantime, legislators have set out their own ideas on resolving the disagreement over tuition increases between UC's president and the governor.

"There’s a lot of rhetoric on both sides on this very difficult issue, but we don’t want to piecemeal this issue and we don’t want to point fingers. This is not the O.K. Corral gauntlet or showdown," state Sen. Kevin de León told NBC4.

His plan would take Napolitano's 5 percent tuition increase off the table and replace it with $75 million in UC funding for more classes and student support services. The plan would also give UC sufficient dollars to open 5,000 seats for California students and collect more money from out-of-state students by raising their tuition by $4,000 each year.

Negotiation and compromise likely will come out of the dueling budget proposals. For now, the tuition increases remain on the table and students wait for a resolution that could well shape decisions on where they'll go to college and how they'll pay for it.