All posts by Professor Bob Meister

Brown and Yudof Bail on the Master Plan

On June 27 Governor Jerry Brown vetoed language inserted by both houses that would have tied UC funding to admitting a minimum number of students (the same as last 2011).  His veto message says as follows:


“Deletes provision 15 of item 6440-001-0001 from AB 1497, because the requirement contained in this provision that the University achieve an enrollment target of 209,977 resident full-time equivalent students creates unnecessary cost pressures on this item and is unnecessarily restrictive.”


This enrollment target, identical with what it was 2 years ago (c.210K), was missing from the Governor’s January budget and the May revise. The  legislature put it back after the LAO notedits absence. Governor Brown’s veto means that, although Master Plan eligibility still exists on paper the state will no longer monitor UC’s compliance with Master Plan expectations. (In some previous years it required that fund be “reverted” to the State if UC did not meet its enrollment target.)


The Council of UC Faculty Association’s Executive Director, Eric Hays has been keeping track of how far the Governor has moved away from Master Plan requirements in the past three budgets. As you can see (below), Jerry Brown is MUCH worse than Schwarzenegger in holding UC to Master Plan targets. By several measures he is also worse in funding UC, which may be why he no will longer hold UC accountable Californians with non-resident students, each of whom yields a surplus revenue of c. $22K . Who will keep these accounts if the DOF and the Governor don’t?

UC remains free to enroll more the 210K resident students even if the state no longer expects it to do so.  This year’s vetoed language contained no penalty if UC missed it’s target, so the Governor’s veto should probably be read as a purely symbolic repudiation of the Master Plan’s link between UC funding and if you want a sense of where things are headed, just listen to President Yudof crow: “[The] bill included California resident enrollment target language that is not consistent with funding levels provided from the State… In accordance with my request the Governor vetoed the budget provisions on the enrollment target ….” (Yudof to Regents, June 29, 2012)

On Friday, June 30, Eric Hays and Joe Kiskis (CUCFA’s VP for External Relations) attended a meeting at UCOP in which the likely outlines of the Governor’s  compact with Yudof were revealed. Joe reports as follows:

In the event that Brown’s ballot initiative does pass, the governor has promised to dust off the multi-year (4-year? 5-year?) UC funding agreement that was apparently worked out between OP and the Governor during the spring and has since been on hold. The present version of this has a 6%/yr increase in state support for UC. That is the 4% previously rumored plus 2% for UCRP. In that eventuality, OP would likely ask the Regents for a 6%/yr tuition increase. (You read that right.) In the event that the ballot initiative does not pass, OP will probably ask the Regents for a tuition increase sufficient to make up for the $250M trigger, the lost $125M tuition buy out, and some other increasing fixed costs for a total increase of 20.3% to be effective Jan. 1, 2013. Yes, mid-year.

But with without any stated expectations for California UC will be free to replace in-state students with non-residents, thereby reducing the budgetary quality of education at campuses that continue to honor the Master Plan. (See… )


Here is relevant language from the last three state budgets as compiled by Eric Hays:


2010-11 (Schwarzenegger’s last): “The Legislature expects the University of California to enroll a total of 209,977 statesupported FTES during the 2010-11 academic year. This enrollment target does not include nonresident students and students enrolled in nonstate-supported summer programs.

The University of California shall report to the Legislature by March 15, 2011, on whether it has met the 2010-11 academic year enrollment goal. For purposes of this provision, enrollment totals shall only include state-supported students. If the University of California does not meet its total state supported enrollment goal by at least 512 FTES, the Director of Finance shall revert to the General Fund by April 1, 2011, the total amount of enrollment funding associated with the total share of the enrollment goal that was not met.” (page 604-605 of…


2011-12 (Brown’s first): “The Director of Finance shall not [emphasis added] revert state funds appropriated to the University of California for the 2011-12 fiscal year pursuant to subdivision (c) of Section 59 of Chapter 7 of the Statutes of 2011 even if the university does not meet its total state-supported enrollment goal.” (page 602 of…


2012-13 (VETOED): “The Legislature expects the University of California to enroll a total of 209,977 state-support-ed full time equivalent students during the 2012-13 academic year. This enrollment target does not include nonresident students and students enrolled in nonstate supported summer programs. The University of California shall report to the Legislature by May 1, 2013, on whether it has met the 2012-13 academic year enrollment goal.”

California’s Legislators Can Resuscitate the Master Plan

This week’s budget endgame presents leaders in the Senate and Assembly with a rare opportunity to stand up for the California Master Plan for Higher Education by challenging the financial incentive that UC campuses now have to enroll non-resident students in place of Californians.

UC describes this policy as though it were self-evident: each campus gets to “keep” the money it generates from non-resident students. But until 2007, out-of-state tuition revenues went to the UC system as a whole, and before the 1990s they went right back to the state. So, we have here a relatively recent policy change in which UC’s central administration is giving individual campuses the incentive to compete against each other for the non-resident students by giving them the entire revenue difference, which is currently in excess of $20,000 per student -the amount by which out-of-state tuition exceeds the sum of in-state tuition, plus state support. This policy change explains why some mature UC campuses such as UC Berkeley and UCLA for example, now expect to have undergrad enrollments that are over 35% out-of-state at the same time that some younger campuses will struggle to exceed their present 2%. The expected result of this competition for non-resident students will be a growing budgetary disadvantage for those campuses that bear the brunt of UC’s enrollment responsibilities under the Master Plan.

There is no reason for Democrats or Republicans in the California legislature to acquiesce in UC’s decision to provide a lower budgeted quality of education to students on campuses that enroll a higher proportion of California residents. Legislators could easily demand that UC pool the $20,000 in surplus funds it collects from out-of-staters for the purpose of reducing the funding gaps among campuses. This demand could be tied to UC’s annual Memorandum of Understanding with the state about the funding of in-state students.

Why not, for example, get UC to agree that any difference in net enrollment revenue brought in by non-resident students be redistributed to the campuses on an equal per student basis without regard to the proportion of non-resident students on that campus?

Such an approach would treat UC’s surplus revenue from non-residents as the functional equivalent of public revenue collected by the University to replace lost revenue from California taxpayers. If the University says it needs this revenue for this very reason, why shouldn’t California taxpayers take in interest in how such revenue is used to support UC’s public purpose? It is entirely reasonable for legislators to demand, for example, that the tuition surplus generated by out-of state students be used to subsidize the quality of education on all UC campuses, especially in bad budget years, so that California residents do not suffer disproportionately from cuts in state funding on the campuses that still admit them. There would be no unfairness to non-resident students if campuses on which they enrolled were allowed to keep (or get back) the same amount of revenue they would get for enrolling a resident-no more, but no less.

Putting UC’s non-resident tuition on the table alongside state funds is entirely consistent with past practice.

UC’s own recent study of its funding streams points out that:

[h]istorically the State paid greater attention to UC’s non-State sources of revenues. The view of the State was that, to some degree, revenues UC generated from student fee and tuition charges…should reimburse the State for its past investment in UC. …For many years, State funding for UC was offset by any increases in funding from these other non-State sources. (University of California Funding Streams Proposal, 12/21/2010, p. 5)

Only in the 1990s, as a result of annual budget negotiations with the state (including so-called “partnerships” and “compacts”) were these offsets eliminated. There would thus be no legal barrier to reimposing them if UC does not agree to use any surplus revenue from non-resident tuition to offset the systemwide loss of taxpayer funding from the state.

Recapturing this surplus revenue to support instructional quality across the UC system would not cost the state anything, but it would be a large step toward reducing the budgetary disparities among UC campuses reported by the State Auditor in July 2011 ( ).This report confirmed and extended my own 2009 finding of glaring inequities in UC’s return to the campuses of funds generated by in-state enrollments ( ). At that time (when tuition was still around $7,000), UCLA was getting back $7,000 more than each of its in-state students generated in tuition plus state funds and UC Merced was getting about $7,000 less. Since 2009, UC has largely corrected this problem with respect to the tuition component of in-state funding, but it has not yet said how much or how soon it will “rebench” (which might or might not mean “equalize”) its distribution of the $2Billion in state funding that it receives to educate Californians. Just last week, two faculty members of the “Rebenching Implementation Task Force” criticized UC’s administration for delaying action on the Academic Senate’s recommendation of a more equal distribution to campuses of state funding generated by resident students ( ).

They believe it was a fundamental error to delay rebenching while UC is speeding up the process by which richer campuses are allowed to capture the entire surplus revenue generated for the system by its growing proportion of out-of-state students. The result of untethering these two processes, they say, will be to widen the per-student funding gaps among campuses that rebenching was supposed to narrow.

Based on the State Auditor’s report alone, California’s legislators should require that UC’s out-of-state tuition surplus be pooled among campuses until UC can satisfactorily account for its use of funds appropriated to educate Californians.

This year’s budget process gives legislative leaders a chance to say that UC’s increasing reliance on revenues from non-Californians should not be used to accelerate the path toward fragmentation of the UC system by allowing some campuses to privatize their enrollments more than others. Legislators have this opportunity because, for the first time in living memory the Governor’s budget is no longer hostage to the 2/3 requirement. He must now either sign a budget passed by the majority party or negotiate proposed changes with it.

UC is already lobbying for changes that would make it no more publicly accountable for its use of state funds than it currently claims to be for its use of non-resident tuition.  UC is calling this their “Debt Restructuring” proposal when in reality, it should be called “Debt Privatization”.  A fitting legislative response would be to hold UC accountable for all the funds it raises from enrollments. Requiring UC to treat its surplus revenues from out-of-state enrollments as public funds that help support California students could change the dynamics of future discussions between UC and the taxpayers of California.