UC President Mark Yudof Throws Down: Delivers “Baker’s Dozen Myths on Higher Ed” at Cal Chamber of Commerce in SF

On Dec. 2, UC President Mark Yudof spoke to the California Chamber of Commerce Board in San Francisco regarding misconceptions about the University of California. The following are his prepared remarks.

“A Baker’s Dozen Myths about Higher Education”

Thank you. It’s a pleasure for me to be here this morning, and to see so many familiar faces.

You know, Mark Twain once said, “Predictions are very hard to make — especially when they deal with the future.”

Unpredictability shapes the job of every university president. And as everyone here knows, much has happened at the University of California in the last few weeks. I’d be happy to answer any questions you have about recent events during our Q&A.

Now, with apologies to David Letterman, I’ve come here today with a list. Unfortunately, it’s not very funny.

It’s a list of 13 myths about higher education.

(I should add that because I’m a big fan of Wallace Stevens, I almost called this speech “Thirteen Ways of Looking at a University.” But in deference to the language of commerce, I settled on “A Baker’s Dozen Myths about Higher Education.”)

These are the myths driving the grand narrative about universities — the grand narrative that says students are being priced out of universities like UC, while funding instead goes to new facilities or administrator salaries. So today, I’m here to dispel these myths.

#1: The cost of producing UC degrees and credit hours has gone up over the last decade.

I hear this myth all the time. And it’s frustrating, because this cost has actually dropped by more than 15 percent, in constant dollars, since the 1990s.

This cost has dropped in part due to a broad range of systemwide efficiencies: common IT systems; reduced employee travel; thousands of unfilled faculty and staff positions; one-third fewer employees at the UC Office of the President; a higher student-faculty ratio, and so on.

What has gone up, however, is the student contribution, or co-pay, to these degrees. At the same time, the state’s contribution per student has plummeted — by 60 percent in the last two decades.

To put this see-saw in perspective, UC students now cover roughly 46 percent of general fund support. But 20 years ago, their share hovered around 12 percent.

Now, sometimes I hear a variation on this myth, in the form of #2:

See the rest after the jump\

“#2 Tuition goes up because the university is providing resort amenities to students.

Perpetuators of this conspiracy theory are fiercely devoted to it. Rock climbing walls, manicured landscaping, gourmet dining halls — these and other examples are constantly cited as the real cause of higher tuition bills.

The images play well in the media, but the myth is totally false (some might say as false as the Fiberglas “rocks” in those rock climbing walls).

Tuition goes up because state funding goes down. Plain and simple.

Indulge me, if you will, with yet another twist on this theme — myth #3:

#3 UC raises tuition as federal student loan caps are lifted.

This purported practice isn’t just false. It’s flat-out illegal for UC and other non-profit universities.

#4: Tenure track faculty at UC do not teach undergraduates.

Tenure track faculty members teach about 61 percent of all student credit hours at UC. And in fact, this percentage is up slightly in recent years as budget cuts forced campuses to reduce the ranks of lecturers, visitors and other non-tenure track faculty.

#5: The number of high-level administrators at UC is expanding.

At UC, we call our high level administrators “senior management group” members, or SMGs.

Rather than expand or remain constant, the number of SMGs has actually declined slightly. Last year, the number dropped from 315 to 293 — which means they account for less than 1 percent of all full-time-equivalent personnel across the entire UC system.

(To this I would also add that most new hires to UC’s administrative staff tend to be paid from non-state funds. And they tend to be hired out of healthier research and clinical medical care budgets.)

In tandem with this claim is myth #6:

#6 High-level administrators at UC are getting big raises.

The vast majority of non-represented UC employees, which include SMGs, have not received general salary increases since 2008. That’s almost four years ago.

Now, we do occasionally — I should say rarely — give SMGs raises. These occur primarily as retention efforts, and the raises come mostly from non-state funds. At our Board of Regents meeting on Nov. 28, we gave raises to nine SMGS for this reason. And I want to emphasize that these were nine employees — out of a total of 180,000.

This year, we also finally instituted a 3 percent merit program for non-represented employees — but with one caveat. They had to make less than $200,000 a year.

In other words, not one of our SMGs was eligible for these particular raises.

Furthermore, our chancellor salaries have been fixed since 2008. And they currently rank in the lower third of president and chancellor salaries at comparable research universities, public or private.

(A sub-myth to this might be, “The UC regents’ salaries are too high.” Although regents have never been paid, at least once a week I receive a letter remonstrating me about their supposedly sky-high compensation.)

#7: Non-residents make up a large portion of undergraduate enrollment at UC.

Non-residents only make up 6.6 percent of UC undergraduate students systemwide. This is well below the percentage at most of the university’s public comparator campuses. At the University of Michigan, for example, non-residents comprise 35 percent of undergraduate students. At the University of Virginia, it’s about 30 percent.

Now, UC’s Board of Regents set a systemwide cap of 10 percent on non-residents student enrollment. But I’d like to add that non-resident students — from other states and other countries — have always attended this university. And it’s long been to the benefit of their fellow students, and their campus communities.

#8: Only the wealthy can afford to attend UC.

Nothing belies this myth more than the incredible socioeconomic diversity of UC students.

About 40 percent of all UC undergraduates receive Pell grants. Pell grant recipients come from families with an annual household income of $50,000 or less.

To contextualize this percentage, consider this: Four of our campuses — Berkeley, Davis, UCLA and San Diego — each enroll more Pell grant recipients than the entire Ivy League combined.

Now, UC takes very seriously its commitment to remain affordable at every income level. Let me explain:

Last year, UC’s average in-state tuition and fees were $11,300 per year. This figure places the university near the middle of its major public comparator institutions.

But 61 percent of all UC undergraduates receive need-based aid. At comparator institutions, it’s around 30-55 percent. And once average grant and scholarship aid kicks in, UC’s average net tuition was only $4,400 — among the lowest of its comparator institutions.

The reason for this is that UC has both very strong state and institutional need-based grant programs.

The university’s Blue and Gold Plan is among these. This program ensures that 100 percent of in-state tuition and fees is covered for all students who come from a family with an annual household income of $80,000 or less.

These students don’t pay one dollar in tuition or fees.

UC also covered the 2011-12 fee increase of $1,890 for needy families earning up to $120,000 per year. In fact, overall, we estimate that the most recent tuition increase was covered for 55 percent of all UC students.

(A sub-myth to this might be, “UC is so expensive that people don’t want to come here.” Our application period ended two days ago, and preliminary figures show that undergraduate resident applications are up by almost 10 percent. I’m reminded of that Yogi Berra line about the restaurant that’s so crowded no one goes there anymore.)

#9: High tuition hurts the poor, and low tuition helps the poor.

High tuition actually hurts the middle class much more than it does the poor. This is because high tuition enables institutions to employ a high fee/high financial aid model. (In this model, a third of the tuition revenue is set aside for financial aid. This is then further abetted by Cal grants and Pell grants for the poor.)

In contrast, low tuition does help the middle class — but at the cost of what is essentially a massive tuition subsidy to the wealthy.

Which brings me to myth #10:

#10 UC student debt is skyrocketing.

At graduation, the average student loan debt of UC students is $16,795. This figure is almost $10,000 lower than the national average, which currently stands at $25,250.

In fact, when adjusted for inflation, UC students’ debt load has remained virtually flat since 2006.

Now, nearly $17,000 is not a trivial amount of debt. But it is manageable. Under a standard 10-year repayment plan, it translates to about $200 a month.

And income-based repayment plans are available to students with exceptionally high debt, or low student salaries.

#11: Corporate and alumni giving can replace all the core funding the legislature cuts from UC’s budget.

Corporate and alumni giving is phenomenally important to UC. It played a critical role in the foundation, and the development, of this university. And throughout UC’s history, it has helped sustain the university during times of fiscal crisis — like the crisis we’re experiencing today.

At the same time, most corporate and alumni giving is restricted – which means that if the state cuts our core funding, private giving can’t necessarily cover the gap.

Last year, for example, UC received almost $1.6 billion in private support. But only 1.6 percent, or about $25 million, was unrestricted.

Now, we need to change that — which is why we just kicked off a massive, multi-year corporate scholarship drive. And this is an investment directly in our students.

#12: $1 billion can be cut from UC’s budget with zero effect.

This isn’t a myth. It’s a canard.

I hear this fiction all the time. And I find it very troubling — extremely troubling. UC’s annual budget is roughly $20 billion. A $1 billion hole is hard to ignore on its own. But it’s more complicated than that.

Much of our funding is restricted. Hospital revenue is restricted. Government grants and contracts are restricted.

You can’t just take money from laser research and give it to a professor of Portuguese. So when that $1 billion is cut from our core funds, it can’t necessarily be covered by our other sources.

And those missing core funds are devastating. They pay for lecturers, light bulbs, and library books. They pay for scholarships. They are the foundation of this university.

This is important, and it brings me to myth #13.

#13: The University of California only serves its students.

This is California’s university. It is defined by its public service mission. And it serves all the people of this state.

So when UC’s core funding is cut, it ends up affecting all of us, too.

You know, a good friend recently emailed this quote to me:

“Why do the taxpayers have to pay for it? Why can’t the government pay for it?”

And I mention this quote to you, because I think it explains why this mythology about UC is perpetuated so easily.

Right now, the zeitgeist — and not just in higher education — really seems to be a disconnect between the perception of how things happen, and the reality of how they do.

The reality is that UC generates $46.3 billion of economic activity in California. It supports 1 in 46 California jobs. And it’s the third largest employer in the state.

That’s a lot of money. And a lot of jobs.

And yet, every year, state funding for this institution dwindles. That $46.3 billion in economic activity was a return on just $3.35 billion of state spending on UC. This year, state spending will probably be even less. And it’s projected that every $1 reduction in state spending on UC could reduce the state’s economic output by more than $2.

This is the reality. And the reality complicates the prospect of UC generating more economic activity, creating more jobs, and educating more Californians.

But the perception is that the university’s trajectory in these areas will continue to grow — whether or not the state’s funding continues to disappear.

That’s why it’s up to all of us to stand up and let our political leaders know that this goes beyond higher education. It’s up to us to set new parameters for the dialogue about this university, and the state it serves. One that acknowledges the facts. One that disregards the myths. And one that recognizes UC as vital to both the economic, and the societal, well-being of California.

Thank you.