Rebuilding The Public University – Against High-Aid, High-Fees Model

In Budget Politics, California, Education Reform, Political Ideology, Politics of Policy, Public Sector, Social Democracy, Social Policy, Welfare State, Youth Policy on January 11, 2010 at 3:51 pm

Introduction:

(Note: finding precise figures and statistics about Blue Gold is not particularly easy. If my numbers here are off, I will gladly revise the piece)

My previous post about the U.C’s policy towards post-docs and other researchers whetted my interest in the travails of the public university, especially as it deals with the universal budgetary crisis faced by higher education during the recession and the underlying process of privatization faced by many public institutions.

The result is a new mini-series of posts about how to rebuild the public university going forward. And a good place to begin will be to make an important distinction about what isn’t a viable strategy for the renewal of the public university – the much-ballyhooed Blue Gold Opportunity Program that U.C President Marc Yudof has made his calling card.

Assessing Schwarzenegger’s Amendment:

Before I explore the nature of the Blue Gold program, it would be remiss of me to overlook the kind of late-breaking news that rarely happens in the world of policy blogging. In his State of the State Address, Gov. Schwarzenegger proposed a new constitutional amendment that would ensure that state spending on prisons would be limited to no more than 7% of the general fund budget and that state spending on higher education would be expanded to no less than 10% of the general fund budget. This policy would be gradually enacted beginning in the 2010-1 budget and culminating in the 2014-5 budget, by which point the transition from current spending would be complete.

It is unusual in the extreme too see a political 180° like this from the same man who created the 2004 compact with the U.C Regents that decreased state support for the U.C, increased student fees by 10% per year (directly creating the need for a Blue Gold program), and committed the U.C to privatizing its funding to compensate for the loss in state funding. More than 190,000 students and 103,000 faculty and staff no doubt wish that Governor Schwarzenegger had thought of his constitutional amendment six years ago.

So, what are we to make of Gov. Schwarzenegger’s road to Damascus moment? On one level, a commitment of this kind would be the profound change in public higher education in California since the creation of the Master Plan in 1960. As this chart notes, the state’s fiscal commitment to the Plan’s vision for universal, free public higher education has slipped inexorably downwards. For just this year alone, the proposed constitutional amendment would have meant $1.7 billion more for the University of California, easily outstripping the $813 million cut it received instead.

All is not sweetness and light, however.

  • First of all, this proposed constitutional amendment does not answer the larger chronic revenue shortage that the U.C’s budget faces; 10% of a budget that has tumbled almost $60 billion since the beginning of the economic downturn, in a state in which revenue bills require a 2/3rds vote to pass the legislature, may not be worth very much.
  • Second, a constitutional amendment that requires minimum funding would exacerbate California’s budgeting problems – given that Propositions 98, 49, and other so-called “auto-pilot” provisions such as Medicare spending and debt repayment eat up 90% California’s budget, carving out another 10%, even if that’s balanced by a reduction in prisons spending only further limits the ability of the state legislature to set policy priorities.
  • Third, there’s a nasty little razor blade in the candyfloss: the privatization of California’s prisons. If you read the text of the proposed constitutional amendment, the California Department of Corrections is empowered to “contract with a private entity for the building of, operation of, transfer of inmates to or placement of inmates in private correctional facilities,” including staffing of all correctional facilities (both in terms of medical and security personnel), and the state is actually statutorily prohibited from reaching the 7% goal by releasing prisoners. Given the documented abuses committed in and around for-profit prisons, there is something morally monstrous with the idea that the futures of the top 1/3 of California’s young will be paid for by the destruction of the futures of its least successful youth. While this power is not mandatory – the Department of Corrections can choose to privatize or not – the text of the amendment does everything possible to make prison privatization an inextricable part of the whole.

In these circumstances, progressives cannot in good conscience support the privatization measures of the amendment as written – and even stripped of these measures, the measure remains a positive step but hardly a silver bullet either for higher education or the state budget. By contrast, conservatives in the Legislature are extremely unlikely to vote for anything that protects public higher education. Given that the governor knows this, it’s likely that this amendment (which Schwarzenegger has insisted will go through the legislature first) is but one more infuriating stratagem in a political career that has successfully alienated the left, center, and right of California politics.

Inside Blue Gold:

If something so seemingly progressive as a constitutional amendment that protects spending on higher education can turn out to be so complicated, what can we say about the Blue Gold Opportunity Program- a program designed to ensure that “”if your family makes less than $70,000 a year and you have financial need, scholarships and grants will cover your fees”? A free college education for poor and middle class kids, paid for by increasing fees on more affluent students sounds like an incredibly progressive thing – and people like William Bagley and Ian Ayres have argued the exact same thing.

The reality is that the Blue Gold Opportunity Program is nothing of the kind.

To begin with, it should be understood that the Blue Gold program doesn’t represent a commitment of the U.C to contribute more to less well-off students as it does a commitment of the U.C to shift as much of its costs onto outside sources as possible. The Blue Gold program is contingent on applying for Federal financial aid and state CalGrants – as their own website notes, “The plan combines all sources of scholarship and grant awards you receive (federal, state, UC and private) to count toward covering your fees.” The Blue Gold program only kicks in when all of your other sources of aid fail to cover the cost of education.

Second, Blue Gold only applies to covering the educational fees the U.C charges (over $10,000 after the rate increase) – which is only 37% of the estimated total cost of education, which the U.C estimates to be $27,000. The difference between the total cost of education and the fees works out to $17,000 a year or $68,000 over four years. However, the U.C may well be underestimating the cost of living – for example, U.C’s estimates for graduate student food costs ($5,000 per academic year) are twice what they estimate for undergraduates living off campus; likewise, transportation costs for graduate students are costed out at over twice what they estimate for off-campus undergraduates.

However, even if we assume that the U.C’s estimates are correct, their sample budgets for families are quite instructive. For example, a family earning $20,000 a year will have to come up with $9,100 a year (or 45.5% of yearly income), a family making $40,000 will have to come up with $11,600 (or 29% of yearly income), a family making $60,000 will have to come up with $16,100 (26.8%), and a family making $80,000 will have to come up with $22,600 (or 28.25%). A system where families making $20k or $40k a year are responsible for a higher proportion of their income than families making $60 or $80k a year is hardly progressive.

Supporters of the system will note that the same budgets assume a much lower family contribution for poor or working class families – but this hardly makes up for the fact that the difference will be made up for by their children. The U.C’s charts show that this model only becomes affordable if students find part-time work during the school year and full-time work during the summer, and take on loans of at least $5,000 a year. Thus, in the best circumstances, a U.C student will graduate with about $20,000 in educational debt, which takes years to pay back.

Should the student be unlucky enough to not find part-time jobs that allow them to save $266 a month during the school year, and $566 a month during the summer, over the cost of living, the actual debt load could soar much higher, potentially to $36-90,000 by graduation.  At a time when the state of California has a youth unemployment rate well in excess of 20%, assuming that students will automatically find employment is not realistic.

At the same time, the Blue Gold program only applies to in-state legal residents. This means that DREAM Act students (i.e, undocumented students) have to pay the full freight, no matter what their economic status. International students, who never become in-state residents, also have to pay the full freight whatever their economics status.

Beyond the Numbers:

While the under-the-hood statistics of the Blue Gold program are hardly progressive, the problem with with the Blue Gold Program runs deeper than just the financial issues. At its root, Blue Gold erodes the essential ideological justification of public higher education: that higher education is a fundamental right of citizenship because an educated citizenry is essential for a well-ordered republic, and because “Education, then, beyond all other devices of human origin, is the great equalizer of the conditions of men, — the balance-wheel of the social machinery...it gives each man the independence and the means by which he can resist the selfishness of other men.” In a republic, where the mental and material basis for independence are so important for empowering active citizens and where great concentrations of wealth can easily become anti-democratic concentrations of power, public higher education is essential.

By emphasizing higher education as an economic good with a market rate, where the benefit accrues to the individual wage-earner, Blue Gold undermines the case for why the public should support higher education at all. In its own literature, the Blue Gold program analogizes paying for education with paying for automobiles, and emphasizes that the major objective of a college education is a higher salary. If a college degree is the same as a car, just another consumer good, there is no public purpose for providing it. (Although a more radical argument might be to say that perhaps consumer goods should be publicly provided/subsidized.)

At the same time, by setting the middle class who must pay Blue Gold’s costs against the working class and poor who benefit from it, Blue Gold erodes the cross-class political coalition that is essential for shepherding public higher education through the legislative process. In this fashion, Blue Gold resembles not a progressive tax (which benefits the poor, the working class, and the middle class alike) but targeted welfare programs that superficially benefit the poor but in reality create huge political vulnerabilities that turn programs for poor people into poor programs.

Finally, we must understand what political role the Blue Gold program plays for the U.C Regents. It’s hardly an accident that the U.C’s 32% increase was paired by an increase in the Blue Gold program’s eligibility and funding; the Blue Gold program functions as political cover, allowing Yudof and the Regents to portray an unprecedented fee increase as essentially painless – look, poor kids aren’t going to get hurt, and we’ll even help out the middle class. Nevermind that in an environment of declining resources, higher tuition creates an incentive for the U.C to enroll rich out of state students who can pay the full freight over poorer students who will require extra resources to attend the U.C, Yudof says he’ll raise an extra billion for financial aid!

In other words, Blue Gold is the “human face” for the privatization of the U.C. A tuition-free institution meant to provide a right of citizenship is becoming an institution that approaches charging a market rate for a private commodity, but Blue Gold provides the appearance that nothing has changed. That’s why it’s wrong.

An Alternate Route:

As an inveterate optimist, I don’t like to condemn any structure without providing a blueprint of what we should put up in its place.

My suggestion is this – we should replace Blue Gold with a new Master Plan designed to gradually reduce tuition to $0 over a period of ten to twenty years, eventually re-establishing the social contract of public higher education in California. This would amount to decreasing tuition by a thousand (or five hundred) dollars a year, which is hardly a small order – it means that each year, we need to come up with an additional $159 million in revenue (to make up for $1,000 in tuition less per student) from somewhere. In other words, in order to make the U.C tuition-free, we need to find $1.59 billion a year in additional financing.

In the grand scheme of things, this isn’t impossible. For example, a constitutional amendment that established a 10%/7% requirement without Schwarzenegger’s privatization poison pill, even after compensating for the $813 million cut this year, would have provided an additional $887 million in revenues, or 55% of the total needed to make the U.C tuition-free. In future years, an additional $1.7 billion a year would easily set the U.C on the right path.

Assemblymember Torrico’s AB 656, which would establish a 10% excise tax on oil (California is the only oil-producing state that does not tax oil) to fund higher education, would raise $1 billion a year for higher education and the U.C’s 1/3 share of that would come out to $300 million a year (or 18% of the total needed to make the U.C tuition free). That’s enough on its own to drop U.C tuition by almost $2,000 a year. While that’s obviously not enough on its own, AB 656 does show that it is possible to make the U.C a free public university by creating some form of independent financing stream.

Ultimately, the re-establishment of the free public university is an ideological statement about the kind of California we want to have. The resources are there – the question is whether we have the political will.

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  1. For students or researchers: I have just added a Reference List to my economics blog with economic data series, history, bibliographies etc. for students & researchers. Currently 100+ meta sources, it will in the next days grow to over a thousand. Check it out and if you miss something, feel free to leave a comment.

  2. […] approaches to developing its youth, and two sets of values – namely, education and prisons. Arnold’s recent proposal to put a floor under higher education at 10% of the state budget and a ceiling over prisons at 7% […]

  3. […] I have argued in the past, we have to stop thinking about higher education as just a matter of job training – it is […]

  4. You might be interested in our publication, “Losing by Degrees”, http://www.eoionline.org/education/reports/Losing_by_Degrees-Jul09.pdf

  5. […] of The Realignment Project will know that I have a deep philosophical and practical disagreement with the reigning “high-fees, high-aid” mo…that has dominated not just in the U.C but throughout American higher education for several years […]

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