We continue our review of the Regents meetings of last week as time permits. As usual, we preserve the recordings and links are below because the Regents delete them after one year.
In the afternoon sessions of Wednesday, July 20th, the National Labs Committee spent only a few minutes approving an allocation of its revenue to various purposes. There was no discussion - just a vote. The Finance and Capital Strategies Committee divided its time between various capital projects - with one deferred until the September meetings because of time constraints. There was considerable discussion of the state budget and its UC component. During this discussion, there was much gushing about how generous the budget is to UC this fiscal year and praise for the "compact" agreement with the governor.
Frankly, it seemed overblown. The Dept. of Finance has now provided more detail to its summary budget numbers. In terms of the general fund's spending on UC, we are due to receive $5.1 billion in 2022-23, up from $4.7 billion last year. That is an 8% increase. There is other funding that goes to UC for special purposes. To estimate what the total was including that funding, I took the total budget 2022-23 for UC of $46.4 billion and subtracted out federal funds and UC generated funds (such as tuition, research grants, etc.) and got a total of $5.3 billion from the state. I repeated the process for last year and got a total of $4.9 billion. Overall, the increase was 7.4%.*
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*https://www.ebudget.ca.gov/2022-23/pdf/Enacted/GovernorsBudget/6000/6440.pdf.
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So, while I understand the politics of gratitude, in loose terms the real budget was about the same as last year. Of course, it could always have been worse. But we do know the history of compacts is not good. They "work" when the state budget is not under stress. When things get tough, they are abandoned.
You will notice that 8% is less than the most recent inflation figure over 12 months which exceeded 9%. The California CPI estimates that the state derives from city estimates within California is only available through April at this time and it showed inflation of 7.7%.** Of course, none of this tells us for sure what inflation will be when 2022-23 is complete relative to 2021-22. And the mix of items in the goods and services "consumed" by UC is different from the consumption basket of the CPI. Still...
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**https://www.dir.ca.gov/oprl/CPI/PresentCCPI.PDF.
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Finally, the Committee discussed a proposed ad hoc COLA (cost of living adjustment) for retirees under the pension plan whose purchasing power had fallen below 85% of their starting pensions. About 4,800 annuitants fell into this category, 900 of which had fallen below 75%. This erosion is due to fact that the built-in COLA of the pension plan gives retirees smaller increases than the CPI when inflation is over 2%. So, in an inflation environment above 2%, longer duration retirees begin to fall below 100% and eventually below a target number such as 75% or 85%. (The regular COLA for most pension recipients was 3.7% despite much higher inflation.)
In the past, the Regents from time to time surveyed the retirees and would periodically - but not regularly - make ad hoc adjustments for those below the target to bring them up to the target.*** The most recent such ad hoc adjustment was in 2001 when the target was 85%. So, the proposal was to repeat the 2001 adjustment.
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***Doing it irregularly was the Regents' method of trying to ensure that the adjustments would not at some point be seen as legally integral to the plan.
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While the proposal was approved, there was some reluctance on the part of some Regents. Regent Perez wanted to revisit the whole defined benefit vs. defined contribution matter - not a bad idea by itself. But he pointed to the fact that the proposed ad hoc COLA wouldn't do anything for more recent cohorts who had larger portions (or all) of their retirement money in defined contribution accounts.
Regent Cohen - a former budget director under Gov. Jerry Brown - noted that back in 2001, the pension was 100% funded and now it isn't. While the $32.6 million this particular proposal would cost had only a small impact on the degree of underfunding, he didn't think that such adjustments in the future could be continued.
Although the links to the full session of the Committee are at the bottom of this blog post, you can see just the COLA discussion here:
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Or direct to https://www.youtube.com/watch?v=Wg2eRK2El0g.
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For the Academic and Student Affairs Committee, we'll let the Daily Cal tell the story: The Academic and Student Affairs Committee members unanimously approved a measure amending Regents Policy 2110 on augmented review in undergraduate admissions. The amendment would codify the removal of standardized testing from the admissions requirements for entrance into the UC system. Furthermore, it will combine seven separate policies on admissions into one Regents Policy on undergraduate admissions. In addition, two provisions were added that would ensure that non-California residents who are admitted to the UC system have, on average, a higher level of academic achievement than resident students.
In a review of a report on undergraduate admissions, the chair of the Board of Admissions and Relations with Schools Madeleine Sorapure reported key findings that demonstrated a 13% increase in total applications in 2021. “In 2021, UC also admitted more California residents than ever before,” Sorapure said. “The increase in applications in 2021 may be partly attributable to the elimination of standardized tests.” She added that 16.2% of California high school graduates were admitted, which exceeded the state’s mandate that the UC system should enroll students from the top 12.5% of state high school graduates. The report further found that the 2021 cycle represented the highest enrollment ever of first-generation, underrepresented and low-income students, with each of these communities representing more than a third of the total student-body population. The report also found that transfer applications and graduation rates were at their highest levels ever.
During discussion of the 51% yield rate for admitted students, UC regent Lark Park questioned what the academic senate is doing to raise the rates for Black and Indigenous applicants. Sorapure and faculty representative Robert Horwitz emphasized that such programs are mostly specific to campus. However, UCLA director of undergraduate admissions Gary Clark proposed that the senate may pressure**** faculty to run more individual programs to raise this yield rate.
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****Why do I think Clark would not like this characterization and especially not like to see it in print?
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“We do coordinate programs for our admitted students from underrepresented backgrounds and have programs where our faculty on campus help to coordinate programming for admitted students and their families,” Clark said at the meeting. “I just want to reinforce how extraordinarily helpful that is.”
Full story at https://www.dailycal.org/2022/07/20/uc-regents-discuss-enrollment-admissions-campus-development/.
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Links to the videos of the various committee sessions are below:
Full afternoon: https://archive.org/details/2-finance-and-capital-strategies-committee.
National Labs: https://archive.org/details/2-finance-and-capital-strategies-committee/2-National+Laboratories+Committee.mp4.
Finance and Capital Strategies: https://archive.org/details/2-finance-and-capital-strategies-committee/2-Finance+and+Capital+Strategies+Committee.mp4.
Academic and Student Affairs: https://archive.org/details/2-finance-and-capital-strategies-committee/2-Academic+and+Student+Affairs+Committee.mp4.
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