In summary

The UC system is in need of reform; here’s a four-step proposal that would unlock R&D potential and expand access to California students.

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By Nils Gilman, Special to CalMatters

Nils Gilman is vice president at the Berggruen Institute and former associate chancellor at the University of California, Berkeley, ngilman@berggruen.org.

California is in the midst of a crisis in higher education. At first glance this may seem paradoxical, as many in California and around the world continue to perceive the UC system in particular as the gold standard for public higher education.

A closer look, however, reveals a myriad of deep, structural problems. 

First, we have an access crisis. The lack of expansion of public universities even as the California population has grown has left California with the fewest public university seats per capita of any state in the country. The UCs have become so difficult to get into, that even excellent Californian students are struggling to gain admissions, even as the UC system has admitted more and more out of state students to bring in revenue. 

Second, we have a quality problem. While the UC system is still among the best public universities in the country, there has been an inexorable decline in overall rankings. When I applied to college in 1989, Berkeley was ranked the No. 6 college in the country. By the time my daughter applied this year, it had fallen to No. 22

Third, underpinning the other two problems, we have a funding problem. As the Public Policy Institute of California has documented, higher education spending has been systematically deprioritized in Sacramento, falling from 18% of the state budget in 1976-77 to 12% of the budget by 2016-17. These funding cuts have been felt most strongly at the University of California, where funding per full-time-equivalent student fell from slightly more than $23,000 to about $8,000.

Meanwhile, in-state tuition rates have been frozen for most of the last decade. Given the decline in state funding and the flat tuition rates, it’s no wonder the UCs have tried to admit more and more out of state students who pay “full rate.” 

Collectively, this is a picture not just of the university system in crisis, but of a social contract in crisis. 

Given that higher education is well documented to be one of the surest fire mechanisms for promoting social mobility, the lack of access and declining quality in California is a sign that a state that is already one of the most unequal in the nation is cutting off its least fortunate members from even the possibility of getting ahead.

As the former associate chancellor at UC Berkeley during a time of austerity and severe budget cuts, I’ve had a front row seat to the terrible choices facing senior administrators across the system, and I have a modest proposal for how to solve almost all these problems at a stroke. This involves revisiting the Master Plan for Higher Education in California

Developed in 1960 by a survey team led by UC President Clark Kerr, the plan set up a coherent system for public postsecondary education which defined specific roles and expansion plans for the different elements of the California higher education system. 

The plan defined a system that would have the elite tier (the University of California) training the emerging knowledge worker and managerial class as well as doing basic research, a middle tier (the state colleges, now joined together as the California State University system) providing general education for the expanding middle class, and a broadly accessible lower tier as the first rung on the ladder, available to all (the California Community Colleges). 

Given the structure of the booming industrial postwar economy of California, this system made a great deal of sense and was the foundation for the long boom that saw California become arguably the most successful economy in the world in the last third of the 20th century.

Unfortunately, the systematic underfunding from Sacramento in recent decades has led to the decay of what is rightly regarded as the linchpin of California’s economic success. The result is that the crown jewel of the state is in need of radical reform that can unlock the fantastic R&D potential of its great universities, while dramatically expanding access to the university for Californian students.

My four-step proposal would achieve both these goals, while remaining revenue neutral for the state. 

  1. Transfer all UC state funding to CSU and CCC to enable the latter’s expansion; 
  2. Abolish the University of California Office of the President and devolve all property and governance to individual UCs;
  3. Allow UCs to raise in-state tuition levels to meet full funding needs; and
  4. Mandate 90% of students come from in state and one-third of tuition go to financial aid.

The California state general fund currently provides $3.7 billion in state funding to the UC system, $4.1 billion to CSU and $5.1 billion to the Community Colleges. Moving the UC budget to CSU and CCC would represent a 40% increase in their state funding, enabling their largest expansion in decades. Given that the CSU is the most important engine of social mobility in the state, this alone would be a dramatically egalitarian move, giving hundreds of thousands of additional students a ladder up to the middle class.

But what about the UC system in this equation? 

First, getting rid of state funding would necessarily mean abolishing the UC Office of the President – a useless piece of bureaucracy that currently eats up a 10th of the total state funding to UC without educating a single student or creating a single innovation. 

The UC Office of the President was created to oversee the expansion of the UC system and to keep the UCs from competing with each other for funding in Sacramento. With state funding to UC zeroed out, the latter rationale is unnecessary, and so is the UC Office of the President, since the imperative to expand would now fall to the existing campuses, which would also have an incentive to do so.

Probably the most controversial element of the proposal would be to allow UCs to raise in-state tuition to whatever level they would like. This is essential to backfill the loss of state funding. At Berkeley, for example, this would likely mean raising in-state tuition sticker prices from the current $14,000 to about $25,000, or perhaps a bit more in order to improve services on campus. The campuses would also have a strong incentive to expand the size of their student bodies, in order to increase revenues.

To prevent this new formula from hurting students from lower income families, the fourth element of the plan would be to mandate that the UCs do what is already their practice, which is to set aside a third of their tuition income for tuition assistance for lower income students. Already nearly half the students at the UCs pay no tuition at all. That would remain the same under the revised revenue model.

Furthermore, the additional rule that all campuses be required to take 90% of their students from inside the state would expand access to the UC system for Californians, helping to assuage the rage and despair many Californians feel when their 4.0-toting high schooler can’t find a place in the UC system. With the UCs able to raise in-state tuition, they would have less need to raise revenues by pursuing out of state full-rate payers.

What would be the net effects of this change to the Master Plan? 

First, it would expand access for Californians at all levels of the higher educational system – UC, CSU and CCC. This expansion would improve social mobility, recasting the social contract of the state. 

Second, the system would allow the UCs to raise the revenues they need to be able to continue competing for talent with private universities, halting the relative decline of the last generation. This would enable the University of California to rebuild its crucial role as an R&D engine, resetting its place for ensuring that California can remain the epicenter of the 21st century innovation economy.

But who would be the losers in this plan? 

The answer is basically only three. The first would be the rich families whose children currently are admitted to UCs and enjoy a state subsidized tuition. (Rich families whose children wouldn’t otherwise have gotten in will presumably be happier.) This is a legitimate objection only if we believe that the state should be subsidizing these most privileged of Californians. 

The second possible set of losers could be UCs that find themselves unable to compete effectively, which could include the campuses at Merced and Riverside. However, they would hold their fate in their own hands: if they improved their product enough to be able to generate the demand for their higher tuition product, they would no doubt find themselves very attractive. 

The last, and most subtle set of losers are those who insist on hanging on to the old system and its superannuated vision of the California economy and broken social compact. Fundamentally, we need a new system that matches the needs of the state as they have evolved since 1960. A New Master Plan for Higher Education in California would be a crucial step for enabling a new and better California.

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