FINANCING the UNIVERSITY --
by Charles Schwartz, Professor
Emeritus, University of California, Berkeley
October 17, 2005
>>This series is available on the internet at
It is Necessary to
Official briefings given to the UC Regents – as background for upcoming
budget priorities - need to be criticized because some crucial data
combines undergraduate education with other academic missions in a very
misleading way. Here I discuss one issue – The Cost of Instruction – in
some detail. I also find occasion to report several clumsy
misstatements by our University President.
At the September 21, 2005, meeting of the UC
Regents two vice presidents of the University (Bruce Darling and Larry
Hershman) led a two-hour discussion titled “Update of the Long Range
Planning Indicators”, in which they presented lots of data and
evaluations focused on the questions of how well, or how poorly, the
University is faring under the current fiscal climate of the state.
Several regents commented that they were tired of hearing such reports
of bad news and they wanted to hear some plans for how UC will cope
with these problems. The answer they got was that the President’s
Office would be bringing specific budgetary proposals to the Board in
November and this presentation was to lay the groundwork for that
I found a significant problem in that some of
the data those vice presidents presented as key numbers in measuring
the state of UC could be very misleading because they lumped together
quantities that are best understood when they are disaggregated.
Two such issues are: The portions of UC’s academic budget provided by
State funds and by Student fees; and The Student-to-Faculty ratio.
In both of these cases one gets very different
numbers, and thus a very different picture of the University, when one
separates undergraduate education from the other components (graduate
education and faculty research) rather than bundling them all together.
In this paper I shall detail this criticism for the first item.
Cost of Instruction
Vice President Hershman showed a bar graph
titled “State Budget Cuts Create Gap of $2,520 per UC Student”. This
showed “Cost of Instruction (in 2005-06 Dollars)” at five-year
intervals beginning in 1985-86. For the current year (2005-06)
the bar showed these component sources of funds for the Cost of
State General Funds: $9,460
UC General Funds: $1,970
Thus, he shows a total Cost of Instruction this year at $16,500 per
student, with Student Fees paying for only about 30% of that total
cost. (You may find this graph at page 34 of the powerpoint file
Hershman showed this same graph twice, to emphasize how important this
Many people would naively be led to believe
that this $16,500 per student is the University’s cost for
undergraduate instruction. That is not true. The very title given to
this data – “The Cost of Instruction” – is grossly misleading. A
more honest title would be “The Cost of Instruction and Research”,
since it is based upon what they call the “I&R Budget.” In earlier
correspondence with Vice President Hershman he explained what his
calculation covers: it is the cost of undergraduate education plus the
cost of graduate education plus the cost of departmental research (that
is, faculty members’ individual research activity, as separate from
externally financed research projects) along with the appropriate
support and overhead expenditures.
If you want to know how much of this bundled
cost is really the cost of undergraduate instruction alone, you have to
engage in some informed analysis of University accounting data to
disaggregate the different components. I have carried out such a
calculation, using data from an earlier UC survey of Faculty Time-Use
to inform the analysis of Activity-Based Costing. My result is
that, this year, the actual
annual expenditure for Undergraduate Education at UC averages about
$6,850 per student; and the current level of resident student fees is
at 100% of that cost!
That result of mine is very surprising; and it
is quite controversial (see below for one reaction). I have written
about this calculation in previous papers of this series; and I have
also written a lengthy (academic style) paper going through the details
of the methodology and the calculation, as well as discussing the
implications of this result: http://socrates.berkeley.edu/~schwrtz/UndergradCost.html
Dynes Speaks on this Issue
An extensive interview with UC President
Robert Dynes was published in the San Francisco Chronicle on
Sunday, September 25, 2005, and this topic came up.
Q: The university says
that it costs more than $15,000 to educate undergraduate students and
that the state is underwriting much of that cost. But Professor Charles
Schwartz calculates that the actual cost is closer to the $6,000 that
undergraduates are paying in tuition. Schwartz is saying that the state
is basically subsidizing [only] graduate students and the faculty.
A: It is not true. The concern is that people like
to think about separating the cost of educating undergraduates and the
cost of educating graduate students. What's not folded in there is
having undergraduates in research laboratories. I'm actually deeply
concerned about graduate support and that we haven't paid enough
attention to finding support for graduate fellowships to keep us
competitive. We are not subsidizing. Charlie Schwartz just isn't right.
When I first read that I thought it dopey to
claim that my analysis is invalid because I neglected “having
undergraduates in research laboratories.” But, since he is the
President of our great University, maybe he does know something more
than I do; so I looked into this topic more closely. Undergraduate
students are widely involved in research programs run by UC faculty
members; it is a terrific experience for the students; but the relevant
question here is, What does it cost the University?
At Berkeley, the main program is called URAP -
Undergraduate Research Apprentice Program. Students, once accepted, get
academic credit at the rate of 1 unit for each 3 hours-per-week of
commitment to carrying out work assigned by the supervising professor.
They are not paid. That is free labor to advance the professor’s
research program, in exchange for interesting experience and a nice
addition to the student’s resume. This is a great deal all
around. But I see no cost to the University here.
Elsewhere, I find some undergraduate research
programs that provide funding from government agencies and private
foundations (McNair, Beckman, …); and, yes, there are some such
programs that appear to have modest funding provided by individual
academic departments. I assume that such expenditures are incorporated
in the University’s accounting records under the Instruction category
(I can find no such specific references in either the Instruction or
Research accounting categories) and thus these would have been included
in my calculation of the cost of undergraduate education at UC.
If President Dynes has any information that would correct or improve my
calculations on this point (or on any other point), I would be most
happy to hear about it.
There is one other important aspect of
undergraduate research activity: it is usually undertaken through an
Independent Study course for which the student signs up; and thus the
professor in charge does spend some time in this form of
teaching. That component of faculty work is explicitly taken into
account in the Faculty Time-Use Survey which provides crucial input
data in my analysis. (See Tables 2b and 2c of my paper cited
Dynes, in the above quoted interview, goes on
to say that he is deeply concerned about getting enough financial
support for graduate students; and this is in connection with the
cost/fee level for educating undergraduates. But then he says,
“We are not subsidizing. Charlie Schwartz just isn’t right.” He
Dynes Speaks on Other Issues
Robert C. Dynes has been President of the
University of California for two years now. His academic background is
as an experimental physicist; and so I would expect him to be competent
at logic and the use of quantitative measures. Here are a couple of
items from his public statements that cause me to wince.
a) At another point in that SF Chronicle interview with President Dynes
we find this:
Q: Dean Christopher
Edley at UC Berkeley's law school says that even with increased fees he
can't do it. He needs to reach outside. He's essentially talking about
privatization. Do you have to do something similar university-wide?
A: I'm not talking about privatization. We are a
public institution. I wouldn't be in this public institution if I
didn't believe in public education.
However, at the July meeting of the Board of Regents there was
extensive debate over increasing fees at the professional schools of
Law, Business, etc. Here is part of Dynes’ statement at that
There was a group of you [regents] who
were arguing for the quasi-privatization of the professional schools,
allowing each of the professional schools to float to their own level,
whatever that level was, and compete with their competition …
Some of what you are seeing here is an incremental step in that
direction: allowing some of the schools to make some choices as to
whether they want to raise fees and put that back into the school to
deliver services and deliver educational products that would make them
more competitive with those schools that they think they are
So, he was talking about
privatization, but candidly only to a different audience.
b) In the midst of a discussion of long range planning issues, this
last January, one regent asked: What percentage of the University’s
bills are paid for by the state, and have we made any projections about
where that number is going to? The President of our University
answered, “It is almost linear, Regent Moores, and it goes
asymptotically to zero.” I wrote to President Dynes asking him to
provide the data to substantiate that doomsday scenario, but he did not
answer me; and the most official data I have seen (Dynes’ letter to the
regents 3/11/05) contradicts his description.
I have noticed some other Dynes misstatements;
but I think you get the point of how the exigencies of office can turn
an acute scientist into an obtuse bureaucrat.