Yudof Spins the Students

by Bob Samuels (10/26/2009)

Yudof Spins the Students

In an extended interview with student journalists, President Yudof showed himself to be an expert of spin and the fine legal art of parsing words. For instance in the following quote, he seems to claim that student fees are going up in order to protect instructional quality and access: “Remember that when we increase fees, one-third of that goes to scholarships so there's more money in the bank for scholarships. Actually, we spend only two out of three of the dollars that we spend out of student fees. Two-thirds of it goes to the instruction program and the like, and the other one-third goes to increasing financial aid.” The key phrase here is “and the like.” This phrase gives him the wiggle room to hide the fact that there is no way of knowing if students fees will go to instructional costs.  In fact, recent history shows that the money students pay will be used for many different things, and most likely instructional programs will be continued to be cut.

One way that Yudof tried to scare students into accepting increased fees is to tell them that if they do not accept the increases, the quality of undergraduate education will suffer: “And the enemy in all of this is mediocrity. We can make your classes bigger, it can take you longer to get your degrees, class access is worse, we can do a lot of things to achieve mediocrity, in fact mediocrity is fairly easy to achieve. But we're not going to do that.” The problem with this statement is that class sizes have already gone up and the number of classes has already gone down. In other words, the system is both raising fees and lowering the quality of education at the same time.  

One of his most questionable moments comes when Yudof acts surprised to hear that class sizes are expanding and the programs are being reduced: “we are getting more and more reports of large classes and closed sections.” It seems that Yudof has forgotten that throughout the summer, he was telling everyone that due to the state funding reductions, there would be expanded class sizes and fewer class offerings. Our fear is that these instructional issues will only get worse next year when the university lays off another 1,000 employees.  As Yudof indicates, most of of these eliminated positions will be the lecturers who teach a majority of the undergraduate courses: “We have a number of choices, we could pass cuts along to the campuses and say that you just to administer it. Berkeley would get its share, Santa Cruz would get its share. They'd look at library hours, number of lecturers they hire, they could look at whatever they wanted to look at.”

We have already seen hundreds of courses taught by lecturers cancelled, and we might see thousands of courses disappear next year. In fact, UCLA has given layoff notices to most of the people teaching writing and foreign languages, and they are discussing suspending all undergraduate requirements.

Of course, Yudof says that these drastic measures have to be taken because the university has no extra money to spend on instruction.  For example, in his interview, he first declares that reserves do not exist, and then later he qualifies his claim: “There are a lot of rumors running around. ... There are a lot of myths that are out there. One myth is that you have a pile of money in your reserves. We don't even really have reserves. We have a checking account. And the truth is we've cut by way of furloughs $184 million and we used $300 million out of our checking account. We used more money out of our checking account than we took out of people's paychecks.” By moving from using the word “reserves” to the term “checking account,” Yudof tries to hide the fact that he has just contradicted himself: at first, he states that there are no reserves, and then he admits that the reserves have been spent down by $300 million.  We are left wondering how the UC can spend something that Yudof says does not exist.

In the continuation of his explanation of why UC does not have reserves to spend, he adds that the reserves are in thousands of different accounts: “The second point is, it's divided into 76,000 accounts, and most of those accounts are restricted. Some of them might be the English department at Berkeley, or they might be the electrical engineering department at Davis, or whatever. Some of it is we sold bonds years ago, we put the proceeds in these bank accounts and we spend it as the building goes up. We go to jail if we spend the bond proceeds money on our operating expenses: We're not allowed to do that. Some of it's for our hospitals. We get about $2.5 billion from the state now, but our physicians and our hospitals bring in more than twice that.” At first, he seems to say that the question of reserves is too complicated to figure out because they are in so many different accounts, but then he switches the argument to turn to the idea that it is illegal to shift money between units. For instance, he has argued that they cannot borrow money from medical profits, but this is exactly what they did in 1993.  Moreover, courts have ruled that UC is only restricted by its priorities.

This question of restricted funds also relates to his discussion of endowments:  “There might be some private money, because we do have some scholarships, endowments.” This is an interesting statement since the university usually claims that endowment money cannot be used to reduce student fees, yet, the campuses have recently raised millions of dollars for undergraduate and graduate scholarships; moreover, much of the endowment money is supposed to be used to support specific instructional programs and departments, and so it is untrue to say that the endowment money does not support the same services as the state money.

The secret history of the UC is that while the per student contribution from the state has stayed the same for the last 30 years, the UC has expanded its income from external grants, medical services, and fundraising. Currently, the state portion of the over-all UC budget is less than 16%, but part of the reason for this is that the non-state parts of the budget have expanded so much.  It is thus highly misleading for Yudof to blame all of the instructional reductions and fee increases on the fact that the state has reduced the UC budget. Moreover, the following claim is completely false: “What we have is a mixed model where the state gave us $15,000 per student in 1990 in today's dollars, and gives us $7,800 today.” This statement is simply untrue; if you take the amount of state funding in 1990 and divide it by the number of students, you get $13,690, and if you do the same thing for 2008, you get, $14,707.  What Yudof is really saying is that the state has not increased the amount they fund each student to match up with rising costs and inflation. However, since 1990, UC has reduced instructional costs by relying on lecturers and grad students to teach the majority of undergraduate courses.

In another important admission, Yudof appears to indicate that by raising graduate and professional fees, the UC can shift state money to support undergraduate instruction: “One of the things that's happened when the professional schools have charged even higher fees is professional schools are getting less and less of the state money. That's basically what's going on--pulling the state money out of the schools that can be self-supporting ... primarily, business and law schools. The money that's being pulled out can then be deployed in liberal arts and so forth. So that's one part of the plan.” The truth of the matter is actually the opposite: undergraduate fees are already subsidizing graduate education and research. In fact, in a study of instructional costs, I discovered that it only costs $6,000 a year to educate an undergrad, and the university gets $14,000 from the state and will get $10,000 from the students, and this does not include the high tuition for out-of-state students. 

Instead of limiting enrollment and raising fees, unions and student groups argue that UC should just use the money it has to get itself through the current reduction in state funds. After all, the total UC budge is $20 billion, and the state reduction was $600 million, which is less than 3% of the budget. While Yudof usually says that the UC cannot borrow its way out of the situation, he does admit here that they could if they wanted to finance their way of the current problem: “We could restructure our debt some more, our debt is like a mortgage so we could refinance, you know if you have a mortgage and you owe $1,000 a month if you can't afford it, you can refinance and only pay $800. Problem is, you would end up paying more interest and so forth over the long run. We probably would refinance some of our debt--wouldn't be smart financially but it would help get us through the year. So those are the sort of things I'm thinking about.” The UC has billions of dollars worth of debt that can be restructured to deal with a fiscal emergency, but Yudof simply chooses not to do this, and instead, he is using a 3% reduction to radically restructure the UC system.  

We should not forget that right after the state reduced the UC budget, the university turned around and borrowed and then lent $200 million to the state, and so the question is why did they not lend themselves money to make up for the state reduction. Actually, UCSD just lent itself $40 million, and every other campus could do the same, but the reason why they will not follow suit is because a decision has been made to raise fees, increase out-of-state enrollments, eliminate programs, layoff teachers, reduce the pay of thousands of workers, and shift money away from undergraduate instruction. 

The first step in stopping this process is saying no to new fees and demand that the university starts representing its financial status in a clear and consistent manner.