Oil Watchdog

The University of California-Berkeley’s law and business schools
were once largely supported by the state. Now they’re just
"state-assisted." In the future, they may be merely state-located.

Faced with a huge state deficit, state Treasurer Bill Lockyer
recently suggested the unthinkable: abandoning the entire UC system, a
move that would eventually save California an estimated $7 billion a
year.

While Lockyer says the concept is simply intended to "generate
discussion," it haunts a system already suffering from a steady erosion
of funding.

Increasingly, UC campuses reach deep into the private sector
for support. And they are not alone: Across the nation, major public
universities are shifting away from taxpayer financing. University of
Michigan President James J. Duderstadt calls his campus a "privately
supported public university."

While UC-Berkeley’s Haas Business School and Boalt Law School
are public in name, almost three-quarters of their funds already come
from tuition and private contributions. UC’s undergraduate campuses
still rely on the state for much of their budgets — but the subsidy
has plummeted 35 percent since 1990.

Lockyer’s "Looking Beyond The Horizon" report, issued Oct. 1,
is his first to envision a more drastic transformation. "Lockyer does
not endorse the idea. He is a UC-Berkeley graduate who recognizes the
importance of a publicly funded UC to our economy," said Tom Dresslar
of Lockyer’s office. "But we’ve got to roll up our sleeves and get
serious about fixing our budget. There are going to be tough choices."

The report has sent shock waves through the UC system; not even President Robert Dynes saw it coming.

"Until I stop breathing, I will fight that," he said. "The
central heart and soul of the university is its support from the state
of California. That has to remain."

UC — an unparalleled research university system that has
driven one of the world’s great knowledge economies — would be
dramatically changed by privatization, says a December 2006 study by
faculty members of the UC Committee on Planning and Budget.

Tuition would climb, jumping more than 80 percent by 2010-11,
to $15,306 a year for undergraduates. Under this scenario, UC could
lose affluent students to smaller private colleges, reducing the
academic quality of the student body. Low-income students would flock
to less expensive schools, reducing diversity. Graduate assistantships
would be in shorter supply and faculty workloads would climb. Lucrative
research would gain importance over teaching.

The campuses would go their separate ways, the report predicts.
The three strongest campuses — Berkeley, Los Angeles and San Diego —
have the market power to attract students from around the world. But
the other nine campuses might struggle.

"It would alter the UC system beyond recognition," the faculty report says. But it adds: "This scenario cannot be ruled out."

So far, UC’s efforts to privatize have been selectively applied to certain parts of the institution, such as:

Higher fees at professional schools

UC’s business, law and medical schools, moving toward greater
financial self-sufficiency, say higher tuition is necessary to stay
competitive.

At the Haas School of Business, total fees could hit $40,882 by
2010-11. At Boalt Law School, fees could jump from $26,897 this year to
$40,906 in 2010-11.

Former U.S. Rep. Tom Campbell, the Bank of America dean of the
Haas School of Business, told UC regents that top business schools
around the country now charge much more than the University of
California. Of students, "it’s reasonable to ask that they pay the
market rate," he said.

Aggressive private fundraising

In the most ambitious campaign in UC-Berkeley’s history, campus
officials are seeking to raise more than $2 billion in private
donations by 2012. At UCLA, officials call their recent $3 billion
fundraising campaign the most successful in the history of higher
education.

But while alumni donations to UC are climbing, officials say
the university still lags behind competing institutions such as
Stanford and Harvard universities.

Greater reliance on corporate research

In a proposed partnership, BP Amoco will build a $500 million
biofuel research center at UC-Berkeley, doubling the amount of
corporate funding for research on campus. Chevron is already paying for
a $25 million, five-year biofuels project at UC-Davis.

"I see privatization happening right now," said John M.
Simpson, consumer advocate for the Foundation for Taxpayer and Consumer
Rights in Santa Monica. "It is wrong to have this fundamental shift in
what the people in California have believed all these years without a
public debate."

Several public universities in other states already have taken
far more sweeping steps toward privatization, hoping to escape the
uncertainty of state budget crises.

At the University of Michigan, state support represents only 18
percent of the academic budget — the comparable figure in California
is 46 percent — and 11 percent of its total revenue base.

"The idea isn’t as drastic as it may sound," wrote Lance J.
Weislak and Michael LaFaive of the Mackinac Center, a Michigan-based
research and educational institute. "And it is not unfair to ask those
who benefit directly from earning the degree to bear a greater burden
to pay for it."

Pat Callan, president of the National Center for Public Policy
and Higher Education, said: "I think all public universities are
talking about it now." But Callan does foresee drastic changes: "Once
you cut the institutions loose, they start serving a different kind of
student."

The University of Michigan has seen some of those changes
already. More than half of its freshman class comes from families with
six-figure incomes. Forty percent of its entering freshman class in
2006 were non-residents. And enrollment by minorities has fallen.

In California, a 2004 "higher education compact" between UC,
the California State University system and Gov. Arnold Schwarzenegger
— a pact that created some fiscal stability through a funding formula
until 2011 — offers modest annual increases in state support. But
critics say it locks in low funding to a system stressed by rising
enrollments.

Educational experts say no amount of private support can fully offset the loss in public funds, even as they dwindle.

For UC’s endowment to pay out enough to cover all of its bills,
the fund would need to be worth $54 billion — twice the size of
Harvard’s and four times the size of Stanford’s. To fund it, every man,
woman and child in California would have to contribute about $1,500.

"It will be literally decades, or even a century, before the
endowment could grow to a point where it could provide substantial
annual support to replace the state," said Steven A. Olsen, UCLA’s
chief financial officer.

Christopher Newfield, an English professor at UC-Santa Barbara
who leads UC’s Committee on Planning and Budget, said extensive
privatization would have catastrophic consequences.

Said Newfield: "The numbers are dismal. They simply don’t add up."
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Contact Lisa M. Krieger at [email protected] or (408) 920-5565.