University of California nears funding tipping point

After years of sagging funding and rising enrolment, the University of California (UC) system is nearing a ‘tipping point’ where it cannot continue to grow with California’s population and labour needs without seeking new revenues and state reinvestment, according to a new report from UC Berkeley’s Center for Studies in Higher Education.

Without state reinvestment it would risk “severely eroding the quality of its academic programmes”.

“We may be at the end of California’s once coherent effort, from 1910 to approximately 1990, to provide resources for UC to grow with California’s population and help meet the state’s labour and research needs and desire to mitigate inequalities in our society,” according to the study’s authors, John Aubrey Douglass and Zachary Bleemer.

Approaching a Tipping Point? A history and prospectus of funding for the University of California, published on 20 August, provides the first detailed historical analysis of the 150-year-old, 10-campus UC system’s funding model, which was once based on enrolment workload.

The University of California has consistently been an innovator in promoting higher educational attainment rates in California. It became the nation’s first multi-campus university system, beginning with the establishment of the University of California, Los Angeles or UCLA in 1919.

UC then added new campuses – mostly in the 1950s and 1960s – and research stations based on the understanding that the strategic geographic location of its programmes was essential to expand access to its educational services throughout California.

A stable source of state funding provided the foundation for UC’s growth in students, research and public service programmes, and in turn UC’s campuses became a catalyst for socio-economic mobility, particularly due to its education of low-income students, the study noted.

“California is the fifth-largest economy in the world and our pioneering public higher education system is a big reason for this,” said Douglass, a senior research fellow at the Center for Studies in Higher Education, which is affiliated with the Goldman School of Public Policy. “UC has been a terrific engine for socio-economic mobility.”

The paper provides a picture of a university that has navigated state funding cuts while enrolling increasing numbers of students, maintaining its research productivity and serving California’s economy and social life.

Current markers of its success include that UC awards 33% of the state’s bachelor degrees and 85% of students graduate within six years, compared with 59% on average nationally. The UC produces 75% of California’s life science PhDs, 65% of the state’s engineering and computer science PhDs and roughly half of its medical students.

Yet some 42% of UC’s undergraduates are from households where neither parent has a college degree and just four of the 10 campuses together enrol more low-income students than all the Ivy League universities combined. These students graduate at the same rates as their wealthier peers.

Also, UC researchers generate an average of five new inventions a day, and roughly 500 patents a year.

Increasing financial challenges

But UC is now facing increasing financial challenges, the study notes. For while state support for the UC system shrank dramatically from 1990, the UC system continued to expand enrolment in line with California’s population growth, up from 166,500 students in 1990 to nearly 273,000 today.

Compared to the size of California’s economy, the government’s per-student contribution to the UC system has fallen by 66% since 2000. But tuition-fee hikes have not fully made up for cuts in state funding, and 33% of all tuition-fee increases are returned to students in the form of financial aid.

The brunt of the tuition-fee hikes is not borne by California residents. Around 57% of UC undergraduates from California pay no tuition fees at all and non-resident undergraduates make up roughly 19% of the student body and pay almost 40% of the tuition fees the university collects.

And while the report also found that there is little statistical evidence to suggest the quality of a UC education has declined as state funding has shrunk, Douglass and co-author Bleemer, who directs the UC ClioMetric History Project at the higher education study centre, argue that that trend is unlikely to last.

This could leave UC leaders faced with difficult choices: limit enrolment and undermine the UC system’s mission to serve Californians, or continue to expand enrolment as California’s population grows and sacrifice educational quality, the paper warns.

Pattern of disinvestment

Douglass and Bleemer warn that California has to overcome a pattern of disinvestment in higher education, partly caused by 75% of students being placed in two-year community colleges instead of four-year degree-granting universities, leaving California in the bottom 10 states awarding bachelor degrees per capita.

As a recent Public Policy Institute of California (PPIC) study found, the state faces shortages of highly educated workers. “Economic projections to 2030 show that about two in five jobs will require at least bachelor’s degrees, while demographic projections suggest only about one in three Californians will have at least a bachelor’s degree,” the PPIC found.

“This shortfall equates to 1.1 million workers…UC would need to award approximately one-quarter of the additional degrees necessary to close the gap.”

Douglass and Bleemer say the PPIC study may underestimate the challenge and point to the potential for proposed federal limits on immigration to also significantly affect the state, which until now has been a magnet for attracting international students and foreigners with advanced degrees, in part making up for the state’s overall low higher education degree output.

“All of these variables lead us to conclude that UC requires renewed long-term state public investment (both operating and capital) and an even more diversified income portfolio,” they say.

Douglass and Bleemer go on to examine possible – and sometimes controversial – ways the UC system could adapt to an unpredictable future with limited state funding, including charging higher tuition for prestigious campuses like UC Berkeley or UCLA, cutting the amount of financial aid offered to students, charging higher tuition fees for lucrative degrees like computer science or offering online degree programmes.

And while those changes may be necessary even with increased state support, Douglass and Bleemer conclude that the only sustainable solution is increased government support.

“The resources are there, and the total investment needed to allow UC, and CSU [California State University], to grow and maintain access to future Californians are relatively small compared to the state’s GDP,” Douglass said. “California’s knowledge-based businesses are already clamouring for more people from UC, and more people with bachelor’s and PhDs.”