Saturday, July 31, 2010

Two-Tier/Two-Part Pension Stew?

The latest in discussion of two-tier pension plans for the state - not specifically UC - is two-tier/two-part. That is, there would be a degraded pension for new hires which would be a mix of defined-benefit and partly defined contribution, cooked into a single plan through some formula. See the report:

Relevant quote by an official of a group pushing pension issues:
Fritz said she has been talking to a labor representative about a “hybrid” plan. Salary up to a certain level, for example $50,000 a year, could be covered by a pension. Then any part of a salary above $50,000 would be covered by a 401(k)-style plan.

“I’ve been saying, ‘If you guys don’t get on this, you could lose control,’” she said.

That last sentence could well apply to the UC Regents. If there is no UC pension proposal by the Regents by the time a new governor takes office, UC could be swept into pension changes that are really aimed at CalPERS and CalSTRS.

Friday, July 30, 2010

U of Texas Has a UCOF-Like Committee: Endorses Online Ed

Report: Shift colleges' focus

Committee suggests better use of online classes and 'no-frills' education


An advisory committee tasked with making Texas higher education more efficient recommended Thursday that the state make better use of online courses and "no-frills" education and tie state funds to course completion rather than enrollment.

Other suggestions included pushing students to finish college in four years and requiring them to complete 10 percent of their degrees outside the classroom.

Mandated last year by Gov. Rick Perry, the 20-member committee of business and education leaders presented a draft report to the Texas Higher Education Coordinating Board meeting in Austin. A final report will go to the governor's desk by Nov. 1.

Jesse Rogers, president of Midwestern State University in Wichita Falls and a member of the committee, said the state's college enrollment and graduation rates range from "poor to awful" and that Texas must get better results for the money it is spending.

"We have built a system of higher education in Texas that we can no longer afford to fund as it has been in the past," Roger said.

Many of report's suggestions are likely to spark controversy, but committee members said the state's economic forecast calls for dramatic changes.

Full story at:

Thursday, July 29, 2010

It's the Chancellor's Fault (At UC-Santa Cruz in 1971)

UCLA Stop on the Subway to the Sea

LAObserved has a piece on 4 proposed subway stop locations for UCLA at:

Don't expect the subway to arrive anytime soon. If anyone wants to compose "Someday, My Train Will Come," here is the music for it:

Brown Statement on Higher Ed in California

Gubernatorial candidate Jerry Brown released a plan for education. Most of it deals with K-12. However, there is a section on higher ed reproduced below. It picks up on the prisons vs. higher ed theme that the current governor sounded back in January - although there is no promise of an initiative that the governor outlined at that time.


Higher Education
The California Master Plan was created in 1960. When I was Governor in the 1970s, the Master Plan was working far better to provide college access and success. In recent years, however, the master plan has been undermined, and it is unclear whether the current financial model for our universities can be sustained.
Recent state budgets have raised tuition drastically, reduced the number of new students--as well transfers from community colleges--to CSUC, cut class sections so that students cannot get basic classes they need, and driven good professors to other states. Students are dropping out because of high costs and the extended time needed to finish. California’s historic public university research base is declining.

This situation calls for a major overhaul of many components of the postsecondary system. We need to convene a representative group to create a new state Master Plan.

We must also reverse the decades long trend of transferring state support from higher education to prisons. We can do this without sacrificing public safety. For example, as Attorney General, I recently blocked a proposed $8 billion prison hospital expansion—which was unnecessarily expensive and which would have added substantially to our state’s deficit. By relentlessly pursuing similar cost savings, we can channel needed funds to our higher education system.

The introduction of online learning and the use of new technologies should be explored to the fullest, as well as ―extended University programs. Technology can increase educational productivity, expand access to higher learning, and reduce costs.

Focus on Community Colleges:
California’s community college system has 72 districts, 110 colleges and more than 2.9 million students and plays a critical role in providing education in a wide range of occupational skills and courses for students intending to transfer to four-year schools.
Given the effective leadership demonstrated in local community colleges, burdensome state regulations and mandates should be kept to a minimum.
Transfer courses should be closely aligned with, and accepted by, the CSUC and UC systems. For example, transfer students are often forced to take redundant courses to graduate from the CSUC system even though they have completed equivalent coursework in community college.

Wednesday, July 28, 2010

Op Ed on Michigan Model in New York State

Prof. Shane White of UCFW forwarded the op ed below to me from the NY Times. It indicates something like the "Michigan Model" is at the center of a state budget debate in New York.

Stop Raiding the Ivory Tower

Published: July 27, 2010

Stony Brook, N.Y.

IT is not a disagreement about expenditures or taxes that is preventing the New York State Legislature from passing a 2011 budget. No, it is a piece of legislation called the Public Higher Education Empowerment and Innovation Act, which has the enthusiastic backing of Gov. David Paterson and grudging approval from the State Senate, but is bitterly opposed by the Assembly and its speaker, Sheldon Silver.

This bill would allow the state’s two public university systems, the City University of New York and the State University of New York, to set their own tuition rates and give them the freedom to raise additional revenue to compensate for the $840 million in budget cuts the state has imposed on them over the last three years. Such a move is long overdue, especially considering that most of the money for SUNY and CUNY no longer comes from state taxpayers.

Look at SUNY’s budget: out of a total annual system-wide expenditure of $11 billion, only $3.5 billion is from the state. The other 68 percent comes from students, research foundations, generous donors and clients of the university’s health centers and other facilities. The CUNY proportions are comparable. As a top SUNY financial official recently told me, New York is “only a minority shareholder” in its public universities.

However, state legislators treat all of this non-taxpayer money as if it were theirs to collect and disburse. Despite cutting the universities’ budgets, lawmakers have raised tuition — by $620 for the 2009-2010 semesters, and again by $100 for the coming school year — and then kept about 90 percent of the resulting revenues. They even want to control how the universities spend some of their outside grants and donations.

The higher education act would allow both CUNY and SUNY to set their tuition levels without the Legislature’s approval and keep all the resulting revenue, accept and retain all money from research grants and philanthropic gifts, more easily enter into contracts with private vendors and enterprise partners, streamline hospital operations, fast-track campus construction and lease parts of their campuses to other parties for academically appropriate purposes.

These new freedoms would be hemmed in by restrictions to maintain student affordability, prevent financial abuses and safeguard the universities’ primary academic missions. Tuition increases would be kept below the Higher Education Price Index, the most widely used gauge of national college cost inflation; all expenditures and contracts would still be subject to stringent state accounting rules; and land leases and contracts would be overseen by newly established state boards, just to mention a few of the bill’s many constraints.

These ideas are not new. During the 1980s, when Clifton Wharton was the chancellor of SUNY and Mario Cuomo was governor, a commission appointed by the SUNY trustees advocated something quite similar. In the years since, the SUNY board has repeatedly pleaded for a “rational tuition policy” that would end the tendency of the Legislature to keep tuition frozen during economic good times when parents might be able to afford increases, only to impose substantial increases during recessions, as happened this year.

Given this history, it is surprising and heartening that the public higher education act has even gotten this far. But there could be no better time: Beyond the immediate benefits for CUNY’s and SUNY’s students and managers, this legislation could help resuscitate the state’s moribund economy. After all, the education of more than 700,000 degree-earning students on 87 campuses contributes tens of billions of dollars a year to the state economy. What’s more, research at the state universities has long played a vital role in New York’s high technology industries.

The M.R.I. was invented at SUNY’s Downstate Medical Center. The bar code reader was developed at SUNY Stony Brook. SUNY Albany’s College of Nanoscale Science and Engineering is working on a new generation of computer chips. SUNY Buffalo’s growing life sciences center is a major engine of the local economy, which is why Buffalo’s Democratic state senator, William Stachowski, won’t sign on to a budget deal without the public higher education act.

The Assembly’s opposition, ostensibly out of concern for student affordability, is both misplaced and insincere. It is misplaced because New York’s Tuition Assistance Program underwrites, on a sliding scale tied to their level of need, low-income students’ tuition burden. And it is insincere because the state has not, over the long term, kept tuition levels below the higher education price index. As we’ve seen, not only does the Legislature increase tuition in huge leaps at the most economically inopportune times, it then retains the tuition revenue to offset losses in general tax receipts.

At the same time, the governor’s endorsement of this bill may rest as much on fiscal necessity as on its merits. CUNY and SUNY are among the few state entities whose budgets are not held hostage by politically powerful interest groups like unionized health care workers and teachers, so giving the schools the ability to raise their tuition as needed would make it easier for the state to significantly reduce its contributions to them. Whatever his motive, however, the governor is right and the Assembly is wrong.

Unless CUNY and SUNY can count on stable and predictable revenues, and have the flexibility to use them effectively to assure a high quality of instruction and research, these great universities will slowly wither, taking the state’s economy along with them.

Peter D. Salins, a former provost of the State University of New York, is a professor of political science at the State University at Stony Brook.

NPR Program: Homeless Students at UCLA

College Students Hide Hunger, Homelessness

Tuesday, July 27, 2010

Wondering About the State Budget?

There isn't one. There are occasional reports of the governor meeting with legislative leaders but no sign of an accord in the legislature - where a 2/3 vote is required - or with the governor. At a meeting with the LA Chamber of Commerce yesterday, the governor sometimes seemed to say there would be a budget in a few weeks and sometimes that there might not be one until a new governor takes office.

About a week ago, a reporter sent me an emailed question about the accuracy of the governor's deficit clock posted outside his office:

I wondered... about the rhetoric going back and forth over how much cash the state is actually losing every day a budget is late. The governor's number, also used by the Republican leadership, is clearly rudimentary, and I wondered if there was a way to distill a better number or at least explain why the governor's figure isn't precise.

I responded:

There are seasonalities in cash flows. The fact that there is no budget actually temporarily saves the state cash, since certain payments are not made but taxes flow in. In July 2009, however, there was a budget in place (although it had to be rejiggered) due to the Feb. 2009 deal. So it is not distorted by not having any budget

The July 2009 cash statement is at

It shows receipts falling short of disbursements by $4.6 billion. So if we put in on a daily basis, the deficit was about $150 million per day.

What this tells you is that in July, there is not a lot of tax revenue flowing in and the state starts paying out for the new fiscal year. The revenue comes disproportionately later.

Clearly, if the state ran a deficit like July every month on the year, it would have essentially gone bankrupt. That would be an annual deficit of $55 billion. Since the entire general fund budget was around $85 billion and since education gets paid off before debt service, we would have defaulted on our bonds and had to release all prisoners including Charlie Manson!

So maybe this illustrates why a daily tabulation doesn't mean much, given seasonality.

There is a larger issue and it has to do with confusing language about state budgets. Most people think a deficit means the difference between inflows and outflows. That is what the federal deficit means. But the governor's $19.1 "deficit" is actually a mix of a stock (what we owed at the end of June 30, 2010, what he would like to add to the reserve (saving), and the difference between inflows and outflows if we did nothing. Here is a rough calculation putting deficit back into its common English meaning. (I am using numbers from the May revise.)

The governor puts what we owed at the end of the last fiscal year at $5.3 billion and what he wants to add to the reserve at $2.7 billion. To pay off the past debt and have a reserve of that size, he really wants a surplus this year of $5.3 + $2.7 = $8 billion. Let's subtract that from $19.1 billion. That leaves $11.1 billion. So we need $11 billion of either more revenue or less spending this year to match inflows and outflow. The $11 billion we need but don't have is the "workload" deficit for 2010-11, i.e., the deficit in common English if we do nothing. Divide that deficit by 365 days and you get about $30 million per day.

Of course, the legislature will eventually pass a budget and it could cut things retroactively. In effect, it is tough to take away money as the year goes on that people think they are getting. So that is the message the guv is trying to convey, albeit imperfectly.

Reports to the Regents on Graduate Education

An "Accountability Subreport on Academic and Professional Degree Students" presentation to the Regents on graduate education at UC is available at:

The presentation contains data on enrollments, time to completion, etc. Conclusions (last slide) are:

UC Leads Nationally
* Attracting high-quality graduate students, an essential condition to recruit & retain the best faculty
* Training high percentage of URM (Underrepresented Minority) students
* Training a high percentage of STEM (science, technology, engineering, and mathematics) doctorates
* Training a high percentage of the nation’s Ph.D.s

UC continues to strive for improved student quality
UC has not yet met its aspirational goals for:
* Diversity
* Student Support
* Completion

The presentation is part of a written report to the Regents available at:

Monday, July 26, 2010

New Exemption for Educational Use of Copy-Protected Material

A web article from NPR on “jailbreaking” cellphones includes the following info of interest to those using videos in class presentations:


“…According to new government rules announced Monday, (there will be)… new exemptions from a 1998 federal law that prohibits people from bypassing technical measures that companies put on their products to prevent unauthorized uses. The Library of Congress, which oversees the Copyright Office, reviews and authorizes exemptions every three years to ensure that the law does not prevent certain non-infringing use of copyright-protected material. (Among the exemptions is one to)… allow college professors, film students and documentary filmmakers to break copy-protection measures on DVDs so they can embed clips for educational purposes, criticism, commentary and noncommercial videos.”

Note: The news release from the Library of Congress is available at:

July 26, 2010
Librarian of Congress Announces DMCA Section 1201 Rules for Exemptions Regarding Circumvention of Access-Control Technologies

UPDATE: From a report on the exemption from Inside Higher Ed 7-27-10: Tracy Mitrano, director of I.T. policy at Cornell University and a technology law blogger for Inside Higher Ed, called the decision "very big news," and "good news," for higher education, noting that advocates in academe have been lobbying for an expansion of fair use exemptions for some time. One campus that might take heart is the University of California at Los Angeles, which an educational media group threatened to sue last spring for copying and streaming DVD content on course websites. The university had refused to stop the practice, and a UCLA spokesman said the group, the Association for Information and Media Equipment, has not followed through. He said UCLA is reviewing the new rules.

Sunday, July 25, 2010

Two Editorials Skeptical About UC Online Degree Proposal

Online degrees in a real world

7/24/2010 San Gabriel Valley Tribune

TWO words best describe the downside of a recent decision by the University of California Board of Regents to develop an Internet-based undergraduate degree program: slippery slope.
No matter how you feel about the undoubtedly rapidly expanding role of technology in higher education, the regents' eventual decision after some fairly in-depth discussion was an odd one at best. That's because everyone backing the exploration of what would be a tremendous increase in the scale of online learning at the nation's greatest public university acknowledges how fraught with educational dangers such a move could ultimately be.
The obtaining of a college degree, especially in North America, is almost as much of a coming-of-age period in a young person's life as it is an education in the sense of book-learning.
Er, computer-screen learning, perhaps.
Calculus and literature and economics are important. It is possible to learn something about them, especially in their early stages, through the impersonal, relatively rote process that a one-size-fits-all computer program can provide. We realize that such programs these days are malleable, capable of recognizing subtleties in an individual's responses, even to the point of cyber-genius. That does not mean they could ever be an equal substitute for a professor in a seminar room.
We certainly realize that professor and that room are expensive, as is all the support and double lattes required to get 15 (or 150) adolescents onto a real campus and into a physical classroom at 9 o'clock on a Monday morning.
But there is something about the interaction of real people in a real place that it will forever be impossible to recreate through virtual realities. If that brands us as Luddites on this issue, so be it. Media, as is said, distorts. A dozen students spread around the globe staring into screens running an interactive Skype connection trained on their prof at a white board, remarkable as that technology is, is still a pale excuse for the sights and sounds, the visual cues, the body language, the subtleties, supplied when students sit around the same table.
Boalt Hall - UC Berkeley's law school - Dean Christopher Edley took on the task of being faculty advocate for a plan to be the first eminent university to develop both completely online courses and, down the road, fully accredited degrees earned without much time spent on a campus.
Like any well-trained legal advocate, Edley made a thumpingly thorough case for the view that mere classroom learning is too old school for words - and that the university can't afford to be left behind technologically. There's also the economic argument - and the undeniable fact that UC classrooms these days are rarefied places.
"We can't treat the excellence of (UC) like a precious little box ... that we protect and we polish and it's as big as it is and whoever can get in it, boy are they lucky," he told the regents. "If all we do in the years ahead is take that little jewel box and put it on a higher and higher and higher shelf, then I think we are betraying our mission."
He said that if California could truly make its university education more available through online learning, "We will have the world's longest intellectual smorgasbord from which to feast."
But a college education is not just the online equivalent of listening to some Great Books seminar on tape. If someone is hankering for extracurricular learning, she or he can already check out The Feynman Lectures on Physics or their literary or social-science equals from the public library.
A university education is also about the tears and the beers, the intramural basketball teams, the dorm-room bull sessions, the library all-nighters, the cute boy or girl in the back row. Mere knowledge is worthless without the human factor for which there is no substitute in a microchip - even a mightily interactive one. We urge the University of California Board of Regents to go very slowly in moving toward accrediting an online undergraduate degree.

Online education? Beware of glitches

Published Sunday, Jul. 25, 2010 Sacramento Bee

It's hardly surprising that, in an era of diminished state support, California's university leaders are trying to find new ways to work around budget-related enrollment restrictions.
Those restrictions have prevented qualified high school students from attending a UC campus, and reduced access to courses for those who do get admitted.
Yet as the UC Board of Regents ventures more deeply into the world of distance learning – online programs and degrees – they need to be careful to put the needs of Californians first and not undermine UC's reputation for quality.
At their July 14 meeting, the regents launched an "Undergraduate Online Instruction Pilot Project" with two parts – one for UC-enrolled students and one for "fully distant" students.
The potential for tapping fee-paying students far from California – the "Kentucky to Kuala Lumpur" dream – captured the headlines and the controversy. Based on the experience of others, there is good reason to be skeptical of a model where individuals never need set foot on a UC campus to get a bachelor's degree.
But discussion of the "fully distant" market ought not to mask the real impact of the online project, which will be on California students. That online shift deserves more in-depth debate.
The heart of the project turns to online courses (typically no face-to-face meetings) for California students to meet their introductory and lower-division course requirements.
These are courses that:
• Have the heaviest enrollments on UC campuses;
• Are most in demand by community college students planning to transfer;
• Are the most oversubscribed;
• And are the ones the faculty are less eager to teach.
So the pilot project proposes to create 25 to 40 online options for high-demand lower division and foundation courses: writing and composition, basic math, calculus, economics, statistics, biology, chemistry, earth sciences, physics, physiology, communications, history, philosophy, politics, psychology, sociology, American studies, anthropology, business.
This covers a big chunk of the undergraduate experience. Students and parents need to pay attention to this shift and weigh in.
Certainly online courses have advantages for students faced with the choice of a 300-seat lecture class or being shut out of a course. They have advantages, too, for students with work or family obligations.
But these courses should not simply be treated as "requirements to get out of the way." They are the principal gateway courses for students exploring a major.
Equally important, for non- majors, they may be the only courses students take in science or politics, for example, which should give them enough to be informed citizens. These need to be strong, interesting courses.
Nor should issues of student accountability be overlooked. How do you know that a student, and not someone else, is actually taking the exam?
Based on experience elsewhere, offering quality online courses may not be a cost-saver. Good online courses are time-intensive.
A few news stories from Inside Higher Education provide cautionary tales on this front.
One September 2009 story describes how the University of Illinois Global Campus "crashed and burned." This attempt to attract a global audience was "going to be a cash cow." Instead, "it's kaput."
Attempting to put up a high-quality program against dozens of low-cost, for-profit online operations proved more difficult than advocates thought. The university invested millions and attracted only a few hundred students.
Another story, featuring the University of Texas, is headlined, "Texas Kills Its Telecampus" (April 9). Money, the story indicated, "played a role in the TeleCampus's hastened demise." This experiment depended on a large annual subsidy from the UT system, plus fees from the campuses.
The University of Massachusetts campus-based online initiative, UMassOnline, has seen better success. It hasn't set unrealistic goals for cost savings. "Not all success is financial" is the motto.
Distance learning has a long tradition in this country and can be an avenue for achieving democratic ideals of access. But to maintain UC standards of quality and a California-first priority, it has to be done right.
That means it is unlikely to be a cash cow.

UPDATE: Article quotes various faculty and others on the online degree concept:

UPDATE: Op ed responding to Sacramento Bee editorial:

Political Deadline on UC Pension & Its Dangers

I have been posting material related to the two gubernatorial candidates' positions on public pensions. As noted, Brown mentions UC explicitly in his pension program - although he does not say anything in particular about it. Whitman does not explicitly reference UC. The key points to keep in mind are:

1) Unlike other public pensions, UC has the $2-for-$1 problem. In essence, 2 out of 3 dollars of employee contributions to UC's pension fund come from non-state sources such as research grants and hospital patient revenues. If the inflow of pension money is too low, the $2 cannot be recouped retroactively. Those dollars become the liability of the fund, i.e., the Regents must somehow in the future find $3 for every $1 they under-collect. For two decades, no contributions went into the pension fund because it had been actuarily overfunded. When it became underfunded, the state did not pay in. Zero contributions flowed in until last April when contributions resumed from Regental/UC money - the state did not contribute. And, so far, the state has no plans to contribute. Even with the resumption in April, the contribution rate is too low and, in fact, is below Regental policy.

2) Within the powers-that-be at UC, there is great temptation to continue the underfunding or to take inadequate steps to address it. Addressing the problem fully means less money for other activities. And the eventual major problem that will arise from inadequate steps today will occur on someone else's watch tomorrow.

3) Within the powers-that-be at UC, there is also a temptation to underplay the connection between the pension and total compensation for faculty. The kinds of solutions that are being proposed, typically a degraded pension for new hires, have only a limited effect on the underfunding problem - which stems mainly from past liability already accrued, not future. But a degraded pension for new hires reduces the attractiveness of the wage+benefit package. A related temptation is to find rationales for arguing that through some methodology, faculty total compensation is not really lagging against the competition (and therefore cutting benefits is OK).

4) Given #2 and #3 above, when proposals regarding the pension go to the Regents in the fall, there may well be push-back and delay. The Academic Senate might resist the kinds of options being put forward. If there is no plan in place by the time the new governor takes office, UC could be swept into general pension "reforms" for the state. Indeed, that could happen even if there is a plan by then. On the other hand, the political deadline of January 2011 could provide a rationale for pushing through UC pension changes that are harmful to UC or that inadequately address the problem.

5) Most faculty are blissfully unaware of points #1-4 above, or have at most a vague perception there is a problem that someone will have to solve. Meetings on campus that have dealt with these issues have been mainly attended by older faculty and retirees, who want assurance they will get their pensions. They are told they will. But younger faculty, who are planning to make a career at UC, are more likely to feel the adverse impact of inadequate solutions. Down the road, and really not so far down the road, the pension problem will have major impacts on funding for other UC activities.

For some examples of the political dynamic surrounding public pensions, here are four items that happen to have appeared in the news just today:,0,73608.story,0,2122415.column

Saturday, July 24, 2010

The Meg Whitman Public Pension Proposal

Earlier today, I posted the Jerry Brown proposal for state pensions, noting that it explicitly mentioned UC. Below are the Meg Whitman proposals from her campaign website. UC is not explicitly mentioned. However, whoever becomes governor also becomes an ex officio Regent.

From the Meg Whitman campaign website

Page 26 of

Solve California’s Pension Crisis
California currently has between $60 billion and $100 billion of unfunded state employee retirement liabilities that are owed by the taxpayers. This crisis has to be addressed to protect the retirement security of state workers and to make it possible to fix the budget mess in Sacramento.

As governor, Meg will:

Institute a Defined Contribution Plan for New State Workers

Meg is proposing a two-tier retirement system that would keep the existing defined benefit plan in place for current state workers, while adopting a more flexible 401(k)-style defined contribution plan for new hires. This would align the retirement savings program available to state workers with what most private-sector workers receive from their employers today.

Raise the Retirement Age for State Employees

Meg also believes that the retirement age for receiving a full pension should be raised from 55 to 65 for most state employees who work outside the public safety sector. In addition, Meg believes there should be longer vesting periods and a prohibition on pension spiking to ensure the solvency of state pensions and to reduce the burden on taxpayers.

Support Paycheck Protection

Meg supports union members having direct control over how their dues money is spent on political activities.

Update: Brown's Pension Program Explicitly Includes UC

Yesterday, I posted a news item on gubernatorial candidate Jerry Brown's proposals for state pensions. More details have now appeared on his campaign website. It is clear that UC is included, based on what appears on the website.


Or pdf version:

Pension Reform

Money needed to fund government employee pensions comes from three sources: contributions by the employees themselves, contributions by the government, and investment returns. Historically 60-75% of the funds have come from investment earnings. As Wall Street profits soared to unrealistic levels, state pension earnings grew abnormally and many California jurisdictions took advantage of what turned out to be a temporary windfall and adopted pension programs that could not be sustained.

These problems grew out of policies established by legislation, regulation and collective bargaining and will need to be reformed through the same processes.

Losses in PERS, STRS and the UC pension funds were caused primarily by the melt down on Wall Street and but also by some bad decisions made by the respective pension boards. Accordingly, the practices of public officials and pension fund managers must be carefully scrutinized to control costs and risks. Everything from retirement benefits and appropriate retirement ages to pension contributions and their relations to salary will be on the table in a Brown administration.

For 70 years our public pension system worked well. Reforms are needed now to return California to a fair but affordable pension system.


As Governor in 1982, I signed into law SB 1326 that called for a Two-Tiered Retirement System to reduce overall pension costs. Pension spiking was not permitted.


1. Stop Pension Spiking and Abuse:

Pensions are meant to be a percentage of regular salary. Unfortunately, there are a number of reported instances (most often at the local level) where special bonuses, last minute promotions, excessive overtime, or other gimmicks are used to artificially inflate final compensation and consequently the favored employee’s pension. These abuses must be stopped.

Pension benefits should be based on normal, recurring salary only.

When I was Governor, “final compensation” was based on the average of the last 3 years of salary. The next governor changed it to just 1 year. This one year rule encourages games and gimmicks in the last year of employment. We should return to a rule where “final compensation” is based on the average of the last 3 years of salary, not just the final year.

The average CalPERS pension is $2,100 per month. There are, however, instances of highly compensated government employees earning excessively large pensions, and a reasonable “cap” on these excessive retirement benefits should be imposed.

2. Two Tiered System. Renegotiate Retirement Benefit amounts for new employees:

Over time, formulas have been negotiated that have allowed employees to retire at earlier ages for higher pension amounts.

I intend to renegotiate current pension formulas. We should require employees to work longer and to a later age for full retirement benefits.

For example, when I was Governor, a miscellaneous employee could retire at 2% per year at age 60. In recent years, this was changed to 2% at age 55. For new employees, these ages must be brought back to the more appropriate levels in place when I was Governor.

3. Stop Retroactive Application of Benefit Enhancements

To date, when new retirement benefits have been approved/negotiated, those new benefits have applied retroactively to years already worked. That practice should be ended.

4. Increase Employee Contributions for all employees

Pension benefits are funded through a combination of employer contributions, employee contributions, and investment returns. Currently, state employees contribute between 5-9% of their salaries to their pensions; at the local level, contributions vary widely among different jurisdictions.

Recently, a number of unions have agreed to increase their current employee contributions to 10% of salary. This will save California as much as $100 million in the upcoming fiscal year.

We need to obtain similar increases in the employee contribution rate for the other government employees.

We must consider extending vesting periods to qualify for retiree health care and also negotiate greater employee contributions to retirement health plans.

5. Prohibit Pension “Holidays”

In recent years, with high investment returns ensuring well funded pension plans, employers (State or Local Governments) decided to reduce or temporarily cease (take a “holiday” from) contributions into pension plans.

We must require consistent contributions to public pension funds over time - no more “contribution holidays” by employers or employees.

This will ensure that we maintain funds adequate to pay promised benefits and that the state’s annual pension obligations are steady, adequate and predictable.

6. Establish Independent Oversight of Pension Funds

We must ensure that public pension decisions are actuarially sound and free of improper outside influence by requiring absolute transparency of all investment policies and decisions. We also need to ensure that investment decisions are prudent.

The Director of Finance, reporting to the Governor, should monitor actuarial assumptions, anticipated annual rate of investment return, and investment activities of the pension boards to create more openness and opportunity for public accountability.

7. Heighten Pension Board Standards and Accountability

We must hold Board members accountable as fiduciaries/trustees to ensure prudent investment decisions and to guard against undue influence of reckless Wall Street practices and special interests.

Board members must be required to undergo specialized training to ensure that they can fulfill their duties as knowledgeable and effective pension fund trustees.

8. Curb or Prohibit Placement Agents

Fees paid to placement agents have increased the costs of our state pension systems. Recently, three private equity firms agreed to cut management fees to CalPERS by $165 million by eliminating placement agents. Going forward, we need to carefully control or eliminate the use of placement agents to generate savings for the pension systems and increase the integrity of the CalPERS investment process.

Friday, July 23, 2010

Brown details plan for California state worker pension reforms

Note: It is unclear from this report whether Brown is confining his comments to CalPERS or whether he includes UC. Other editorial interjections in bold below.,0,7462149,print.story

Brown details plan for California state worker pension reforms

The Democrat would adopt some Schwarzenegger ideas, such as asking current employees to contribute more to their plans and raising the retirement age for new hires.

By Michael J. Mishak, Los Angeles Times

July 23, 2010

Unveiling one of his few major policy proposals Thursday, Democratic gubernatorial candidate Jerry Brown called for public-pension reform, embracing some of Republican Gov. Arnold Schwarzenegger's ideas for curbing the soaring cost of the state worker retirement system.

If elected, Brown said, he would ask current employees to contribute more to their pension plans and would raise the retirement age for new hires. The measures are core components of tentative deals Schwarzenegger has negotiated with half a dozen state workers' unions.

The candidate said he would end pension "spiking" by basing employees' pension benefits on their base salary and stop enlarging workers' payouts with bonuses, promotions, overtime and unused vacation in the final year of service. Under his plan, benefits would be based on the average of an employee's last three years instead of the final year.

(Editorial comment: UC already does this. We are the good guys here.)

Payouts would be capped at a "reasonable" level, he said, declining to be more specific.

(Editorial comment: This could be a problem for faculty depending on the definition of reasonable.)

Brown also said he wants to establish independent oversight of pension funds, require special training for board members and curb or prohibit the use of placement agents — middlemen who advise funds on investments and receive a commission as payment. He said the practice costs pension funds millions of dollars and in a recent civil lawsuit accused one middleman, a former pension fund board member, of defrauding the fund of $40 million.

(Editorial comment: The Regents are the trustees of the UC plan. Is he proposing something else?)

Racked by the recession, public pension funds have lost billions of dollars in investments, creating large unfunded liabilities that threaten to choke off funding for other government services. California taxpayers must make up the difference.

Brown's plan would also bar retroactive payments if benefits are ever enhanced and ban pension "holidays," periods in which governments reduce or cease contributions. He said he would pursue his proposed changes through a combination of legislation, regulation and collective bargaining "to return California to a fair but affordable pension system."

"I'm not going to blame public servants for problems that have been created by Wall Street hedge funds and mortgage sellers, but at the same time, as I did as governor, I know when it's time to tighten our belt," Brown told The Times, describing his proposals as a "framework."

The proposals could vex the labor unions whose money fuels his campaign, but they allow him to draw a contrast with his Republican opponent, Meg Whitman.

For new state hires, Brown would raise the retirement age from 55 to 60. Whitman would raise it to 65 for both future and current workers. Whitman also would retain pensions for current workers but adopt 401(k)-style plans for new hires. Although half a dozen states and the District of Columbia have taken that route, Brown says he's dedicated to maintaining pensions for all state workers.

(Editorial comment: What is "the retirement age?" The minimum age at which one can retire? The age at which the age factor is at its maximum? Can you legally change the retirement age for current employees?)

Whitman's idea, he said, "is to cast everyone into the loving embrace of Wall Street."

Whitman spokeswoman Sarah Pompei, who has been criticizing Brown for a lack of specificity about what he would do as governor, said his "musings contain nothing that would fundamentally change the broken pension system that benefits the very public employee unions that are funding his campaign."

Service Employees International Union Local 1000, the state's largest public-employee union, has rejected Schwarzenegger's call to increase the amount that state workers pay into their pension plans, a key part of Brown's proposal.

In its latest offer, the union, which represents 95,000 state workers, agreed to make "temporary concessions" in exchange for a 5% pay increase in 2012. Among the other concepts it has agreed to: increasing the retirement age from 55 to 60 for some employees and a one-year pay cut of about 4.6% in exchange for eight hours of personal leave.

Dave Low, a lobbyist for the California School Employees Assn. who chairs a labor coalition on public pensions, said union leaders hope Brown, like Schwarzenegger, would bring his proposals to the bargaining table and not pursue legislation.

"Obviously, we don't love the proposals," Low said. "Any way you look at it, most of the things he's proposing will cost workers more and provide workers less in their retirement. But a lot of the unions are coming to grips with the fact that it's probably something they're willing to negotiate and put in place."

He pointed to the six unions that have already made concessions, hoping modest givebacks now will help avoid larger ones in the future.

"We're facing huge layoffs and furloughs," he added. "We realize when our employers don't have the money. The cost of public services are mostly people. We're realists."

Advocates of a pension-system overhaul welcomed Brown's proposals, many of which they have championed for years.

"He's right on. He's bulletproof," said Marcia Fritz, president of the California Foundation for Fiscal Responsibility, which backed an aborted ballot measure to enact similar changes. "I'm very happy he's embracing pension reform. It remains to be seen if he can handle the pressure to give the status quo what it wants."

Thursday, July 22, 2010

Getting to UCLA on Sunset Blvd from the Westside Will Be Difficult Next Week

LA County Supervisor Yaroslavsky's blog warns that the Sunset Blvd. bridge over the 405 will be undergoing demolition next week. You are best advised to use a different route to UCLA from the Westside. The blog contains a history of the bridge, built in 1955, together with early photos such as the one on the left that shows hardly any traffic. The full story is at:

As for the photo on the right, it is also a bridge, albeit one that is hidden by landfill. At one time a ravine ran through the UCLA campus and a bridge led over the ravine to Royce. When the area around the bridge was filled in, the bridge just appeared (and still appears) to be an ordinary pathway. However, a sign warns heavy trucks of the bridge's weight limits. Nobody is talking about demolishing it.

UC's Pension at Least Gets a Mention

UC's pension system (and its funding problem) is often lost in articles about public pensions in California. Usually the focus at the state level is on the big CalPERS and CalSTRS funds. Or it is on particular municipal pensions such as the pension of the bankrupt city Vallejo. The website, in an article today, did mention UC as part of a general discussion.

The full article is at:

The UC excerpt:

"The UC Retirement System ended a two-decade contribution “holiday” this year. Neither employer nor employee paid into the system, while costs were covered by investment earnings.

A required employee contribution to a 401(k)-style individual investment plan, 2 percent of pay, was switched to the retirement system in April. UC says the state should be contributing $320 million a year to cover normal costs, but it’s getting nothing so far.

The remarkable contribution holiday enjoyed by the UC system shows how public pensions depend on investment earnings."

On net, it is better for UC to be mentioned in public discussions of the state's pension problems. There is at least recognition that we are not part of CalPERS and have special issues. The danger facing UC, as noted in prior posts, is that come January - with a new governor in place - we will be swept up in "reforms" really aimed at CalPERS and CalSTRS.

Things-Could-Be-Worse Dept.: Rolling Back the Budget at Texas A&M

A&M may flush free TP in dorms


The Eagle

Published Wednesday, July 21, 2010 12:10 AM

Elaine Benes sits in a bathroom stall, pleading with a stingy toilet-paper hoarder to "spare a square."

"Excuse me. I'm sorry. This is, a, kind-of embarrassing but there's no toilet paper over here."

"Are you talking to me?" the stranger asks.

"Yeah, I just forgot to check. So, if you could spare some."


More awkward banter.

"Three squares? You can't spare three squares?" Benes shouts.

The woman leaves after saying: "No I don't have a square to spare. I can't spare a square."

That famous scene from the 1990s sitcom Seinfeld soon may be playing out thousands of times in dorm bathrooms across the Texas A&M campus.

It's come to that.

To save money, the Department of Student Affairs is considering shelving free t-paper in the residence halls. Discussions still are under way, but it's likely that the larger dorm bathrooms -- where four or more gather -- will keep the necessary item in stock.

Other cost-cutting measures under consideration: Not buying new furniture for Rudder Theater, reducing student worker wages, eliminating one exhibition a year in University Arts, eliminating cell phone stipends for several staff members and reducing the amount of paper, toner and other supplies throughout the year.

The toilet paper savings would wipe away about $82,000 of the $2.2 million that Student Affairs has been charged to reduce in its operating budget for fiscal year 2012. The department's reduction plan was released Tuesday, along with almost $40 million in proposed downsizing across the campus.

Some students interviewed said the t-paper issue brings into focus how desperate the funding situation must be.

It wasn't clear late Tuesday how many rolls or what type of toilet paper the university buys annually. Under the proposal, after getting a few free rolls at the beginning of a semester, students would be on their own in purchasing the hygiene supplies.

Michael Spiegelhauer, a 20-year-old biological and agricultural engineering major from Bartlett, said the cut in bathroom supplies is "definitely going to be a major complaint for students."

Spiegelhauer lives in Fowler Residence Hall and said he receives new rolls about once a week.

"It's going to become a problem," he said.

He said he'd rather see tuition raised than have to worry about where he's going to get his TP from.

"How's he going to get TP?" asked his buddy, Daniel Overstreet. "He doesn't even have a car."

Overstreet, a 20-year old electronics, engineering and technology major from Flower Mound, said he thinks the change will result in Aggie's breaking some rules.

"It's going to make people resort to going where there is toilet paper on campus and taking it from there," said the off-campus student.

Wednesday, July 21, 2010

After the Faculty Assn. Letter to the Regents of June 2009, Where Are We?

Font sizeIn a previous post, I noted a proposition that the governor promised – but that never appeared – to insure that California spent more on higher ed than on prisons. In mid-June 2009, the Faculty Association sent a letter to the Regents and President Yudof asking that the Regents treat the UC budget crisis as an emergency. It gave examples of the impact of budget cuts on campus operations and the difficulties facing UC in funding the retirement plan. The letter is reproduced below. It produced a front-page headline in the San Francisco Chronicle.

The response from President Yudof and Regents Chair Blum seemed to promise that the Regents were aware of the emergency and were responding to it. The letter from Yudof and Blum can be read at:

Subsequently, the Regents raised tuition significantly and created two taskforces. One was the University Commission on the Future (UCOF). The other was the Post-Employment Benefits Taskforce (PEB). PEB has yet to report, although that failure meant that the July Regents meetings did not deal with its topical area. UCOF has released an 80+ page report, available at:

There are many recommendations in the report but these tend to focus on changes that do not have an immediate impact on the budget problem. Exactly how UC gets from now to the envisioned future is unclear. This question is especially pressing absent resolution of the issues that the PEB report is supposed to cover.

So the question remains: Did the Regents in fact respond to the emergency effectively? Or has the response gone the way of the governor's proposition on higher ed funding?

The Regents continue to meet on a bimonthly basis, a schedule that is not reflective of an emergency situation. This pace is particularly worrisome with regard to the UC pension and its funding problems. A new governor will come into office in January 2011. Public pensions are certain to be on the agenda, regardless of which candidate wins. There is a danger that UC will be swept into solutions aimed at CalPERS and CalSTRS which do not fit UC’s needs, if UC does not have its own plan in place by that time.

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The UCLA Faculty Association

P.O. Box 33336, Granada Hills, CA 91394-3336

Phone & Fax 818/341-8664

June 17, 2009

An Open Letter to Richard C. Blum, Chair, and all Members of the UC Board of Regents

Dear Chair Blum and University of California Board of Regents:

The University of California is facing a budget emergency that is already having an immediate and seriously negative impact on the academic quality of the University. In the longer run, it will require that we restructure and redefine the University's role in the state of California. But our sense as faculty is that you are not fully cognizant of, nor acting in response to, the scale of the emergency that we face.

Your last meeting was on May 7, before the recent general election on the budget-related propositions. It included no serious discussion regarding the implications that the failure of the ballot measures would have for the state budget and how this would drastically affect funding for, and student access to, the University of California. Subsequently those ballot measures overwhelmingly failed. To make matters worse, recent reports from the state controller and other officials show that state revenues are falling short of even the most recent projections.

As Regents, you are both the trustees of the University and the fiduciaries of its retirement and other funds. You can help shape the University infrastructure so that it can become more efficient and less costly. You can interact with the Legislature so that the University can accomplish its agreed upon academic mission and fulfill its larger commitment to provide an educated and innovative workforce for the state of California. Please allow us to suggest what the situation looks like from a faculty perspective at the campus level.

The new fiscal and academic year begins on July 1, barely days away. Starting in August or September, depending on the program involved, new students will be enrolled and current students will be resuming their classes. They are coming or returning with expectations about classes offered and the time needed to fulfill degree requirements. Yet our campus administrators tell us that replacement faculty cannot be hired, fewer courses can be offered, classes will be larger, some programs must be discontinued or substantially curtailed, and that pay cuts and furloughs for faculty and staff will most likely be implemented.

Student fees have already been raised and that trend, we are told, is likely to continue. In the medium term and into the foreseeable future, student enrollments will be cut. Research units will be reduced in scope or eliminated.

At the campus level, various task forces of administrators and faculty are at work, trying to implement short-term adaptations to these pressures. Open meetings have been held to discuss the emergency. Our top administrators candidly admit that the magnitude of the cutbacks in state funding were not anticipated until quite recently.

As one administrator put it, the meter starts running on July 1; every dollar spent unnecessarily after that date will make subsequent reductions all the more severe. They now believe that the cuts experienced will be largely permanent and that the state can no longer sustain UC at past levels. In addition, because of the drop in the stock market, the retirement program now has a substantial unfunded liability which, if left unattended, will cripple the University. Yet no UC employer contributions are being made to the retirement system. Each dollar not contributed means the retirement fund loses $2 in contributions from non-state sources.

We are not asking you to micro-manage the University. But clearly major policy guidance is needed and you as Regents are designated as the ultimate makers of such policy. It is evident that the old Master Plan of 1960, which defined higher education in California and served the state so well for decades, is now an historical relic. The 2004 “compact” with the governor applied only in good economic times and is no longer relevant. Business as usual is no longer an option.

Should we move to a new model for the UC system? If so, then what model? How will you maintain student access to UC and a high level of quality education if the response to the budget crisis is to downsize the University? How do you plan to restore financial health to the UC retirement plan so that it doesn't become a liability to the financial well-being of the University?

In the face of the unprecedented crisis facing the University, we urge that emergency and open meetings of the Board be convened to explore the implications of the budget crisis for the future of the UC system. As policy makers, you must hammer out with the legislative leaders and the governor a new relationship between UC and the State of California. The Board must explore major short-term responses to the current budget crisis and develop the essential medium- and long-term strategies the University must adopt.

We do not want the proposals made by some legislators to change the constitutional position of the University of California established over a century and a half ago to preserve the University’s academic independence from political pressures. Faculty members are strongly opposed to such a change. We need a new Master Plan of 2010, not stopgap responses to the budget cuts. We are not in normal times, and we need a fully engaged and active Board of Regents.

This is an emergency. We need your help.


Dwight Read, Chair, UCLA Faculty Association

Warren Gold, Chair, UCSF Faculty Association

Ian Kennedy,Chair, Davis Faculty Association

Just Asking: Where Is the Proposition on Higher Ed vs. Prisons?

Yesterday I posted the LAO’s guide to various November ballot propositions. Perhaps it might be of interest to ask about a proposition that is not on the ballot in November – and which was not on the ballot last June, either. Remember the governor’s State of the State speech in early January? If not, you can read it at:

You might recall that the governor proposed a constitutional amendment that was supposed to guarantee that spending on higher ed would exceed spending on prisons. His accompanying press release summarized the plan as follows:

Constitutional Amendment to Increase Higher Education Funding
While this budget year will pose many challenges, the Governor drew the line at education and called for a historic realignment of California’s priorities. He announced that he would work to protect California’s schools and to shield higher education from further cuts. The Governor called on the legislature to help him make California’s education system a higher priority than prisons. Specifically, he proposed:
A constitutional amendment to ensure California cannot spend a greater percentage of General Fund (GF) dollars on its prisons than on higher education.

Still more details on the amendment were provided by the governor at:

The proposal was praised by UC leaders at the time. Whatever happened to it? Just asking.

Tuesday, July 20, 2010

LAO analysis of Nov ballot propositions

Various propositions will be on the November ballot thanks to Governor Hiram Johnson (elected 1910) who brought us direct democracy. Some may have indirect implications for the state and therefore the UC budget. None deal directly with higher ed financing. The Legislative Analyst's Office (LAO) has now released its analysis of each of the ten propositions. You can read the LAO's views at

(Be sure to click all 3 pages. Note that there have been moves to pull the water bond off the ballot.)

Among the propositions for November is one that would allow passage of the state budget (but not tax increases) by majority vote. Another would legalize marijuana and allow it to be taxed. (But don't run out and spend the money yet.) Yet another repeals various business tax breaks that are slated to go into effect under an earlier budget deal. However, some propositions might make it hard to craft state budget deals. One tries to stop state raiding of transit money, for example. Another tightens up the fee vs. tax distinction, which would put more items now labeled as fees under the requirement for a 2/3 vote.

UC Davis Chancellor cautious regarding online degrees

July 19, 2010
UC Davis Chancellor cautious regarding online degrees

From The Swarm blog, Sacramento Bee

The editorial board met with University of California, Davis Chancellor Linda Katehi this afternoon in a wide-ranging recap of her first year on campus.

Last year, she spoke to the board about the challenges of fulfilling the public mission of the university in an era of reduced state funding. "That mission," she said, "has been compromised by the inability to fund it. ... The struggle is to keep quality in place and to keep it affordable."

That challenge remains.

On Monday, she handed out a pie chart showing that only 21 percent of UC Davis operating funds came from the state in 2008-09. Public universities that once were publicly funded and free to students, she said, now "are only partially supported by the state...but the mission remains the same: access to excellence."

The more the state cuts, she acknowledged, the more pressure there is to raise funds from other sources. She, herself, spends at least one day a week fundraising out of the office.

She responded to a question on action last week by the University of California Board of Regents and UC President Mark Yudof endorsing the idea of developing a fully online undergraduate degree, which UC Berkeley Law School Dean Christopher Edley had said would make a UC degree "available to people in Kentucky and Kuala Lumpur."

Chancellor Katehi made it clear she does not support the idea of "an education without placing a foot on campus." But she could support a "hybrid model" with parts of a course online and part in the classroom, which she believes allows more students to have access to courses.

She thought there may be some areas where students could do a full degree online, "but not a bachelor's degree." She said that UC Davis "will be cautious" and "will not be the first" in pursing online degrees. She said UC Davis would look at a hybrid model.

The editorial board will explore some of the chancellor's other ideas in future editorials. Stay tuned.

Pay to View at Once-Free UC-Berkeley Archive

(Scroll down to bold)

UC water archive to leave Berkeley campus, go to two campuses in south state

By Mike Taugher Contra Costa Times

Posted: 07/19/2010 04:36:49 PM PDT
Updated: 07/19/2010 05:25:01 PM PDT

The West's premier archive of historical materials about water development is being moved from UC Berkeley to two universities in Southern California.
The Water Resources Center Archives, a unique collection of technical reports, speeches, photographs and other historical materials, has been housed at the Berkeley campus for more than a half-century.
However, budget worries and concerns that the Agriculture and Natural Resources Division of the UC president's office lacked the expertise to maintain the archive led university officials to seek proposals from other schools interested in housing the collection.
Late last week, UC Senior Vice President Dan Dooley announced that the archive would be moved to libraries at UC Riverside and Cal State San Bernardino.
In making the announcement, UC officials said that UC Riverside has a record of expanding digital access to materials about agriculture and the environment.
The materials, including 200,000 technical reports and thousands of photographs, maps, newsletters speeches and other documents, are scheduled to be moved beginning this fall.
"We have a strong interest in preserving and digitizing the collection for the future "... to ensure the widest research access to all of the archive's contents," UC Riverside librarian Ruth Jackson said.

The school plans to charge for Internet access to the materials, which now are available for free.

"I think it's sad that we're going to be leaving Berkeley after 51 years, but I look forward to the water archive continuing to serve UC and the California water community from the Riverside campus," said Linda Vida, librarian and archive director for more than 17 years. She is one of four employees at the archive.
The collection is open Monday through Friday from 10 a.m. to 5 p.m., but Vida said it was unknown whether it would remain open on the Berkeley campus after July.

LA Times: UC gets smarter about budget cuts

LA Times Editorial,0,4866950.story

UC gets smarter about budget cuts
Centralizing some administration and allowing more out-of-state and foreign students will help the University of California weather decreased revenue.

July 20, 2010

Dwindling state funding has presented the University of California with a menu of unappetizing options during the past few years. Its first efforts to cover the gap were clumsy, harming students as well as its prestigious reputation. This year, university officials have gotten smarter about surviving the recession intact.

With the state unable to fund the number of California students who should be accepted, according to the Master Plan for Higher Education, UC obviously couldn't continue with business as usual. It reduced class offerings. Most campuses reduced enrollment, providing fewer residents of the state with access to its premier institution of higher education. And it raised fees, putting it out of the reach of many middle-class families.

UC's reputation — Berkeley is ranked as the top public university in the nation — wobbled as more students were drawn to other schools and those who enrolled at UC hunted for seats in needed courses. And it unwisely continues to consider charging more for some majors, such as economics.

But this year, UC President Mark Yudof has pushed a smarter approach, long advocated by this page. In May, the university announced that it would centralize administrative functions such as payroll and purchasing among its 10 campuses, an efficiency measure that will ultimately save half a billion dollars a year. Last week, it released enrollment data for this fall, showing that the number of out-of-state and foreign students would increase dramatically at UCLA and especially Berkeley. Those students are top achievers who bring in money by paying out-of-state tuition. They also bring more diversity to campus.

California students still pay a price. Berkeley has been criticized for reducing the number of state residents it accepts as it doubles nonresident enrollment. But most UC campuses have been reducing admissions whether or not they enroll more out-of-state students. The schools simply cannot afford to educate, at their own expense, more students than the state has been willing to pay for. As more resources become available, UC and the state must make the admission of more California students a priority; but as a long-term strategy, enrolling more out-of-towners is a judicious decision that will preserve the state's crown jewel of higher education.