University of California President Janet Napolitano’s troubles over the State Audit are not a one-off case of mismanagement or bad governance. They are symptomatic of a larger and longer term problem: dramatically shrinking revenues have made the UC’s task increasingly impossible, triggering the fancy footwork by an Office of the President trying to safeguard its reserves and simultaneously manage the politics of what has become an untenable position. No doubt Napolitano is undermined when the constituent parts of the UC sing a different song to herself and the regents. No doubt also, the legislature and the public must know where things stand. But the real issue is that the University of California, and also the CSU, no longer have the public financing to fulfil their far-reaching public mandates.
It is a crisis that has been forty years in the making. The table (below) summarizes the funding trend from 1960 to 2010. The tax revolt and Proposition 13 in 1978 ensured that despite some good years in the 1980s the public funding of public higher education would never be as strong again as it had been in the great days of the 1960 Master Plan.
The table illustrates the rapid rise in total funding in the first two decades of the Master Plan as enrollment grew more rapidly than planned in the community colleges. In the 1970s the University budget slowed due to the combined effects of Governor Reagan’s opposition to UC Berkeley, and demographic factors. Nevertheless, the economy was up in the 1980s, and Governor Deukmejian made higher education a priority, granting the University of California a 30 per cent increase in its operating budget in 1983. Despite the gathering fallout from Proposition 13, the 1980s were on the whole a good decade for the University. State support increased for the CSUs and the community colleges also. However, Proposition 13 meant that in some years, community colleges had to turn away applicants, a sign of things to come. Also, the share of total state expenditures going to the UC and CSU fell, from 11.3 per cent in the Master Plan year of 1960, to 7.8 per cent in 1995. (Over the same span funding for prisons rose from 2.4 to 7.1 per cent of state spending).
The 1990s saw the end of funding growth in the UC and CSU, though the enrollment grew by 8.5 per cent in the UC and 2.5 per cent in the CSU. The final decade in the Table (below), 2000-2010, was considerably tougher. It saw a major reduction in fiscal support, much of it concentrated at the end of the decade, reflecting the effects of the 2008-2010 recession. State funding of the University of California fell by 24.7 per in real terms between 2000 and 2010, while the enrollment increased by a massive 40.2 per cent. There was a 14.8 per cent decline in California State University funding over the same 2000-2010 period, while the enrollment rose by 28.2 per cent. The funding of the community colleges increased by 14.2 per cent, which almost matched the enrollment growth of 16.2 per cent, but the community colleges had less opportunity to raise non-state revenues than did the CSU and UC campuses.
Student enrollment in public higher education, and state and local government financial support, California, 1960 to 2010 (constant 2010 prices)
The 2008-2010 recession generated havoc in state revenues and was especially bad for the unprotected areas of the state budget. Douglass reports a cut of $813 million in the funding of the UC system in 2009 and 2010. Public funding, the bedrock of long-term planning in the early decades of the Master Plan, is now more volatile and less predictable than tuition revenues and other private sources. UC campuses are beginning to imagine a future in which state funding is negligible. In the decade between 2002-03 and 2012-13, state revenues received by University of California Berkeley declined from $497 to $299 million in current dollars, a reduction in constant price terms of 54 per cent. Successive state governments have learned that they can reduce university funding without a severe public backlash, but there is more likely to be public opposition if they sanction the tuition increases necessary for institutions to make up the shortfall. From the 1990s onwards, a new pattern was established, in which the years of funding recovery were insufficient to compensate for years of reductions. Small cuts were not undone and tended to accumulate. In this asymmetrical policy framework, and given the continued legal/fiscal constraints on the state, California’s recession-induced cuts now look to be largely irreversible.
Like their public sector counterparts in many other states, the UC and CSU finds (and will continue to find) it extremely difficult to secure state support to raise tuition so as to compensate for the effects of state cutbacks. Nevertheless, tuition increases sufficient to plug the gap in spending also carry problems. Public institutions depend on public support, both to secure favorable state policies and more generally, to function effectively in a highly networked society and economy. Public support is no doubt undermined by rising tuition, and this also eats into the access mission of the University of California, which so far has been largely maintained despite the circumstances. On the other hand, public support is weakened also by reductions in service quality due to insufficient funding, and the access mission needs to be subsidized. In 2013, after the recession, the student-to faculty ratio in the University of California was 24 to 1, compared to 19 to 1 a decade earlier, and 15 to 1 in the 1980s. The public university campuses find themselves positioned between the Scylla of a resource decline that would undermine all objectives, including the research outputs and quality on which so much else depends, and the Charybdis of public unpopularity and mission compromise. They feel forced to become more like a private university, so as to uphold their public mission effectively in social competition with the real private sector. They have limited options, with only research funding, foreign students and noncore revenues as potential sources of much needed additional resources. In this setting the University of California campuses have no clear-cut forward strategy.
The problem is specific to public higher education rather than general to higher education as a whole. The effects of the recession differentiated between the University of California, which depends partly on the Californian state budget and whose tuition is state regulated; and private universities such as Harvard, Yale, Stanford, and Princeton, which are free to manage their prices and carry significantly larger endowments than Berkeley, UCLA, and UC San Diego. Though both state funding and university endowments fell sharply in value in the first two years of recession, the recovery in each case was different. By 2014 endowments had been largely restored in value but the state funding cuts seemed at least partly permanent.
While the UC campuses and the beleaguered UCOP are struggling to cope, right now, the deeper effects of today’s crisis will play out over decades. Of all the jewels of American science, California public education has shined the brightest. As I discuss in my book published last year, The Dream is Over: The Crisis of Clark Kerr’s California Idea of Higher Education, the UC still houses four of the world’s top twenty research universities, in terms of the amount of high quality science produced—Berkeley, UCLA, San Francisco, and San Diego—and seven of the world’s top sixty. Not if present trends are maintained.
Money matters in research and education, as it does in most everywhere else. Past patterns show this. In a study of American science , James Adams finds that in the 1990s there was an overall slowdown in the output of the public universities. Though their share of federal research grants grew their revenues from their respective state governments fell, which ate into the capacity to sustain research infrastructure and faculty time on research. It is a sign of what is to come. The drop in state support across the country in the 1990s, studied by Adams, was nothing compared to what happened after the 1990s in California. Between 2002-03 and 2012-13 the proportion of Berkeley’s revenues coming from state sources dropped from 34 to 13 per cent. That decline is continuing. Unless the state, and ultimately the taxpayer, have a change of heart the UC position is going to get much worse.
 Clark Kerr, The Gold and the Blue: A Personal Memoir of the University of California, 1949-1967, Volume 1: Academic Triumphs (Berkeley: University of California Press, 2001), 189.
 Patrick Callan, “The Perils of Success: Clark Kerr and the Californian Master Plan for Higher Education,” in Sheldon Rothblatt, ed., Clark Kerr’s World of Higher Education Reaches the 21st Century: Chapters in a Special History (Dordrecht: Springer, 2012), 67, 69.
 John Aubrey Douglass, “Can We Save the College Dream?” Boom: A Journal of California, 1 (Summer 2011): 28. http://boom.ucpress.edu/content/1/2/25.
 John Wilton, data supplied by Vice-Chancellor, Administration and Finance, University of California, Berkeley, October 2014.
 Neil Smelser, Dynamics of the Contemporary University: Growth, Accretion and Conflict (Berkeley: University of California Press, 2013), 44-48, 85.
 John Aubrey Douglass, To Grow or Not to Grow? A Post-Great Recession Synopsis of the Political, Financial, and Social Contract Challenges Facing the University of California. Research and Occasional Paper CSHE 15.13 (Berkeley: Center for Studies in Higher Education, University of California Berkeley), 7.
 James Adams, “Is the United States Losing its Preeminence in Higher Education?” in Charles Clotfelter, ed., American Universities in a Global Marketplace (Chicago: University of Chicago Press, 2010), 44-66, esp. 65.
 John Wilton.
Simon Marginson is Professor of International Higher Education at University College London, and also the UCL Institute of Education. He is the Director ESRC/HEFCE Centre for Global Higher Education and Joint Editor-in-Chief, Higher Education. His recent books include, Higher Education and the Common Good (Melbourne: Melbourne University Publishing, 2016) and The Dream is Over: The Crisis of Clark Kerr’s California Idea of Higher Education (Berkeley: University of California Press, 2016), which is a new Luminos Open Access. The above essay is adapted from pp. 135-138 of The Dream is Over.
Copyright: © 2017 Simon Marginson. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC-BY 4.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. See http://creativecommons.org/licenses/by/4.0/