where does the money go?

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Public Forum on the Universitys Finances held at UC Berkeley October 23, 2009 Presentation by Charles Schwartz Professor Emeritus of Physics & uncertified accountant http://socrates.berkeley.edu/~schwrtz For more details see: Seminar on Financial Futures for UC. Where does the money go?. topics. - PowerPoint PPT Presentation


  • Public Forum on the Universitys Financesheld at UC BerkeleyOctober 23, 2009

    Presentation by Charles SchwartzProfessor Emeritus of Physics& uncertified accountanthttp://socrates.berkeley.edu/~schwrtz For more details see: Seminar on Financial Futures for UC

    Where does the money go?

  • topicsWhat is UCs true Cost of Education? 3Is the UC administration bloated? 10Why do students pay more and get less? 12Has Pres. Yudof been fair and honest? 14Should we democratize the Regents? 19

  • An Academic DisputeAccording to UC Budget officials as of 2007,Students now pay approximately 30% of the cost of their education.

    According to my calculations as of 2007,Undergraduate students are now being charged 100% of the actual cost of their education.

  • I asked UC officials to investigate this discrepancy

    They replied that their methodology, to calculate the per-student cost of education, is promulgated by the National Association of College and University Business Officers, and has been endorsed by the higher education community.

    Lets look into this.

  • The 2002 Report: Explaining College Costs: NACUBOs Methodology for Identifying the Costs of Delivering Undergraduate Education: Add the institutions expenditures for Instruction and Student Services, add some overhead for facilities and administration, then divide by the number of students.

    That sounds fine for 2- or 4-year colleges.What about Research Universities?

  • On page 27 of the NACUBO report we read Several alternative proposals were considered, but NACUBO concluded that all departmental research costs should remain within instruction and student services.

    So, what is departmental research?

  • Departmental Research is an Accounting term of artIt is all the research work I do as a professor at a research university that is not explicitly paid for by an external funding source.

    In other words, my entire academic year salary which pays for all my work in teaching and research and service is recorded as an expenditure for Instruction; and that whole thing is added into the Cost of Undergraduate Education.

  • Who is Paying for What? Research at the University is a wonderful Public Good. It should be paid for with public funds.

    Teaching at the University used to be considered a Public Good and the state paid for it. But in recent years the cost of Education has been shifted to students, saying that it is for their Private Good.

    This study shows that we have reached the limit of what can be charged to undergraduate students -- unless you want to make UC a private university.

  • Questions? Comments?How do you do those calculation? --> See details in week #4 of the Seminar.Is there no connection between Faculty Research and Undergraduate Education? --> There is some; and it is quantifiable. Are you saying that all research universities are corrupt in their financial accountability? --> Yes. NACUBO maintains that discipline.

    Next: another problem about how UC uses its money

  • Apparent Bureaucratic BloatAs Detailed in week #5 of the Seminar:UC employment statistics over 1996-2006 show outsized growth in the categories of Management and Management-support jobs.UC officials have not been able to offer any credible justification for this.I estimate the apparent waste for all UC is $600 million per year. Berkeley is worst at $91 million

  • Now, a Third example of money mysteriesUCs Chancellors said they are cutting TA positions due to the state budget shortfall.

    Total annual cost of all TAs is $200 million.

    Total UC revenue from students Educational Fees is about $1.5 billion.

    What are their priorities?

  • Accountability & TransparencyWhat is UC doing with the money which students are paying them to provide their education?

    UC students now have Reg Fee Advisory Committees. How about overseeing use of their Ed Fees - 10 times as much money.

    For more on this, see (9/10/09) http://UniversityProbe.org

  • How has President Yudof handled this years budget crisis?The crisis is real; his handling of it has been mixed in terms of fairness and honesty.

    Many of the most highly compensated UC employees were given exemptions in his paycut/furlough plan.

    See Persistent Dishonesty from UCOP (9/19/09) at http://UniversityProbe.org

  • UCOP Budget MisrepresentationsFirst they said most non-core funds were restricted as to use.Then they admitted this was not really so.Then they continued to say restricted.Then they said that most unrestricted funds were committed. But they certainly can re-commit those funds. Havent they declared this an Emergency?

  • Another story - from July 16, 2003The UC Regents created a new financial arrangement - an Indenture called General Revenue - so they could borrow more money more easily.Student Fee Revenue would be the largest component of this new pool of money to back construction projects.

  • From the Regents Minutes 7/16/03Mr. Charles Schwartz, UCB Professor Emeritus, spoke in opposition, believing that what seemed simply a technical change was a swindle that would direct the revenue stream provided by tuition and student fees toward financing construction projects.

  • October 2009Professor Robert Meister, head of the UC Faculty Association, reports that this prediction has become a reality. He says that The Regents are increasing student fees in order to expand their construction plans.UC President Mark Yudof responds, It is untrue because we are not allowed to use student fees to pay bonded indebtedness. -- Wrong, again!

  • Should we Reform the Regents?They are now accountable to nobody; and they are the main source of the corporatization at UC.Years ago I was involved in an attempt to Democratize the UC Board of Regents. We added explicit language to keep the political independence of the academic functions of UC.But for financial oversight and general policy there is more virtue in direct democratic rule.

  • Regent Richard Blum - July 2009What we need to do with this university, and you heard the story from Chancellor after Chancellor is doing whatever we can to preserve the best people. And in fact the best people are taking the highest cuts. The Chancellors alone, and God bless them, three years ago we knew their compensation was 35 or 40 % below market. For three years in a row I talked to them. I said, Do you want me to walk the plank? Ill get you an increase. And every time they said, No, well stay where we are; we are team players. So I think thats all right for a year and maybe youll get a lot of your good people to sit still for a year. But you are already hearing about people leaving, starting to look the other way. But I think we have one year to really figure out who, in each part of this institution we need to embrace and keep; and what we need to build on. Because the idea of just cutting from the top is absolutely the way to kill this institution.>>> Corporate values for the University

  • For an Alternative Set of ValuesSee the 1992 Resolution of the faculty at Berkeley, which recommended that Executive compensation be no more than twice the average compensation of Full Professors. http://academic-senate.berkeley.edu/archives/documents/ExecCompResolution19921.pdf

  • F A A TFungibility is theAntithesis ofAccountability and Transparency