UC Regents Discuss Budget Cuts At San Diego Meeting

University of California regents met in San Diego this week to discuss how to close a $1 billion budget gap. UC President Mark Yudof said thousands of qualified applicants will be turned away because of a proposed $500 million budget cut for 2011-2012, and other "unavoidable" expenses. The California State University system is also facing massive budget cuts that could lead to layoffs, and higher tuition. We discuss how the budget cuts could impact California colleges.

Guests

JW August, managing editor for 10 News.

Bob Kittle, director of News Planning and Content for KUSI.

Andrew Donohue, editor of voiceofsandiego.org.

Read Transcript

GLORIA PENNER: I'm Gloria Penner, I'm joined by the editors at the round table these days in San Diego. Today, we'll look into the financial crisis facing the University of California and other public colleges in this state. Local reaction to the vote this week in the House of Representatives to repeal the new healthcare law, and with a new downtown Los Angeles NFL stadium gaining momentum, what this could mean for the Chargers. The editors with me today are JW August, managing editor for Ten News. Top of the what, JW.

AUGUST: Top of the morning to you, Gloria.

GLORIA PENNER: You got it, I'm glad you're here.

AUGUST: Thanks.

GLORIA PENNER: Bob Kittle, director of news content and planning. Bonjour, Bob.

KITTLE: Bonjour, madame. Comment allez vous?

GLORIA PENNER: Oh, I am. And Andrew Donahue, direct -- editor of voiceofsandiego.org, I don't know if I was going to elevate you or not there Andrew.

DONAHUE: Please do.

GLORIA PENNER: Okay. Editor of voiceofsandiego.org. That's his real title. Our number is 1-888-895-5727. The University of California board of regents was in San Diego this week for meetings. And it turned out to be a sobering experience. The UC system is facing a $500 million cut in state funding. If Governor Jerry Brown's budget proposals are enacted. So JW, let's start with that half a billion dollar reduction and the warning from UC president Mark Yudof, that deep budget cuts will change the public university into more exclusive campuses. What does that mean?

AUGUST: Well, you're gonna have fewer students, they have to either increase the enrollment of out of state students so they can get more money for them for tuition. Fewer students and smaller classes, and fewer teachers you know, they've gotta figure out where they're gonna cut from. Of course, he's -- you know, I acquaint him to Marie Antionette, let them eat cake. He's up there in his tower all the time talking about the little folks, and what the little folks should do, meanwhile the -- the executives in the system continue to rack up nice bonuses, they make really good money, nobody's talked about cutting their salaries or cutting back on their hours.

GLORIA PENNER: Yeah, I wanted to ask you about that. What has been President Yudof's reaction to those very highly paid executives at UC, who are wanting their pensions to be increased?

AUGUST: Well, he's opposed that too.

GLORIA PENNER: Okay.

AUGUST: Because that's passed the pail. That is so ridiculous. I mean, they want to raise the cap on the amount of money they can pay for their pension, above even what the federal government says it should be. And they're threatening to sue. Two of those people, by the way, are locals, that had a couple of our medical institutions.

GLORIA PENNER: Okay. So that gives us an idea. Right now it's not going anywhere, is it?

AUGUST: No.

GLORIA PENNER: One would think, considering that they're facing a billion dollar shortfall. And let me turn to you on this, Andrew. So it's a half a billion dollars in proposed cuts. And then there's a half a billion dollar shortfall because it appears that the expenses have gotten higher at the universities. And so that's where the total billion comes in.

DONAHUE: Exactly, and it's part of a bigger picture in which the state's financial picture is an entire mess. And I think this is one of those things that really drives it home. We talked about, all these sort of numbers, and how the state is broken. But this is a very perilous point. The UC system has been the envy of the world. And has really driven our education system, our economy here in a large part, part of who we are especially here in San Diego. The existence and the success of UCSD brought someone like Erwin Jacobs here to teach classes, and he founded Qualcomm, which is our largest and most successful company. So this has really important impacts on our real fabric of life here in San Diego.

GLORIA PENNER: What do you think the reality is, Bob Kittle, of UC actually changing its nature? When I think of the word, exclusive, I think of in addition to fewer numbers of students, I also think of it going for students that can afford to pay more.

KITTLE: Well, I think that's true. But let's put it in perspective, if you're going to Stanford or Harvard, you're going to pay 30, $35,000 a year in tuition. Even with these tuition increases, the UC education is about 8000, a little less than $8,000 a year, even with the eight percent increase that has just been adopted. But as the regents pointed out in their meeting this week in San Diego, they do cross an important new milestone with this new budget, and that is students will now pay more of the cost of their education than the state does. The state has picked up more than half in the past. That is the taxpayers. And in the beginning, the goal was to basically provide a free education that the tax payers would pay for all it. But let me point out one other thing that adds to the peril, and that is that these draconian cuts are premised upon the voters extending $12 billion in tax increases that I do not think the voters are going to extend. That is, on the state wide ballot in the last -- since 2006, there have been eight measures to raise taxes, the voters have rejected all eight. Including the three tax increases that the governor wants extended, the voters in 2009 rejected extending those tax increases, I think they probably will again. And then the state will actually have to make deeper cuts in its budget than Brown has already proposed.

GLORIA PENNER: Well, let's ask our listeners about that. You've heard that the UC system is facing draconian cuts, a billion dollars between cuts and expenses. And Bob Kittle is posing that you, the voter, will not even under these circumstances vote in June, which is when they want to get this on the ballot, to extend the tax cuts.

KITTLE: The tax increases, yes.

GLORIA PENNER: The tax hikes that were imposed, I think, in 2009, weren't they?

KITTLE: They were imposed in 2008 on a temporary bases.

GLORIA PENNER: Okay. 2008.

KITTLE: As an income tax increase, a sales tack increase, and the vehicle license fee.

GLORIA PENNER: Exactly. So, despite these cuts at UC, Bob Kittle is saying that you would not vote to continue these tax hikes, considering that the state is in trouble. We'd like to hear from you on that. How serious are these potential cuts to the UC system? Does it bother you at all? And might that be a reason for you to vote in favor of extending the tax increases? 1-888-895-5727. Go ahead, yes, JW.

AUGUST: Well, and next week, the CSU system is gonna be facing the same issue. They've got their meeting up in Long Beach, and it's the same amount of dollars, same amount of issues.

GLORIA PENNER: California State --

AUGUST: University. And I happened to graduate from that, so I know they graduate some mighty smart fine people out of the system. And they're facing the same issues.

GLORIA PENNER: And what about the community colleges? Because that's usually the fall back place.

AUGUST: Right. And they face $400 million in cuts.

GLORIA PENNER: Right, which is close to what the other two school systems are facing.

AUGUST: Exactly, they're all gonna be equally skewered because of the problems they're having with the state budget.

GLORIA PENNER: All right. So, let's look at what the options might be. What options does the UC system have to close that $1 billion gap if it does happen, other than raising student tuition? What do you believe, Andrew.

DONAHUE: Well, I think -- I don't know that it's even a UC system problem, it's a state budget problem. I think we've seen Governor Brown take at least some pretty quick and radical steps in proposing things like doing away with redevelopment. Remember, this is a program that allows local governments to keep a lot of tax money within certain areas and subsidize development, and in very stark times like this, we may need that money for education. I also had read an article this morning in the New York Times actually that lawmakers in DC are very quietly setting the stage to try to create some system where states can actually declare bankruptcy to get out from pension deficits to deal with these exact costs. So it would be really interesting it see if states currently can't declare bankruptcy, but they're trying to figure out a way that they actually could.

GLORIA PENNER: Oh, Andrew, all those people who own municipal bonds, especially general obligation bonds from the state, they are running to their brokers now and saying, let me cash out. You just did that, Andrew.

DONAHUE: I think those are the last things that would ever be touched, I mean, we're talking about dealing with structural budget deficits. So we're dealing with trying to find a way to deal with pension costs and that kind of stuff.

GLORIA PENNER: Okay, let's go to the phones with Justin in Mira Mesa. Hi, Justin, you're on with the editors.

NEW SPEAKER: Hi, I just wanted to ask which editor was saying that the cost of yearly tuition at UC was 8000.

Gloria Penner: That was Bob Kittle, and you that the it was somewhat more.

AUGUST: 11000.

GLORIA PENNER: Oh, yeah, it's a lot more. I just graduated from UCSD this last spring and looked at taking a remainder class this fall, and it was at least $5,000 a quarter, and that doesn't include books or cost of living 'cause the -- first of all, you have to understand going to these universities, the rigor of the curriculum and the amount of stress a student is -- leaves very little time for actual work outside of, you know, studying. And so many of us, you know, don't actually have part-time jobs or full times jobs in addition to schooling. So we have to actually take the cost of living, and roll it back into student loans. So more like the cost is about $25,000 a year.

GLORIA PENNER: What about grants, Justin? Aren't there some cal grants and some federal grants that you could get?

NEW SPEAKER: I believe the cut backs in the cal grants have almost pretty much excluded a lot of middle class or even somewhat of the middle lower income brackets from actually being able to get any sort of scholarships. Now, UC provides a number of grants, but a lot of them are income based or need based.

Gloria Penner: Okay.

NEW SPEAKER: And so it leaves a lot of the individual cost up to the student to afford. And you know, it's just a tradeoff between what do we prefer? Education and higher learning or do we prefer, you know, large pensions or other, you know other budget deficits that cut into services?

GLORIA PENNER: Well, thank you very much, Justin, for laying that out. And you know, I think students are worried, Bob, that more tuition hikes would be imposed, so wouldn't that automatically narrow down the list of applicants to only those who can afford to pay the tab? Doesn't that automatically make it a very exclusive system?

KITTLE: It certainly limits access. A chunk of that tuition goes for scholarship aid. So there is scholarship money available, which makes it -- means more people can afford it than otherwise would, but there's no doubt that it does limit access. And the figure that I cite, 7,950 sum dollars was the figure cited in the UC regents' meeting this week as the cost of tuition. It does not, of course, include dorm fees and books, which can be rather hefty as well.

GLORIA PENNER: And probably other fees too.

KITTLE: There may be other add on fees, sure.

GLORIA PENNER: Okay. Thank you, and Justin thank you for your call. Let's go to Tom in Poway. Tom, you're on with the editors.

NEW SPEAKER: Thank you. One gentleman mentioned that they may have to go to more out of state students, and my question was, do the out of state students get subsidized by California State or -- question too also foreign students because I recruited at San Jose State, I know that's not UC, but they were telling me that they were being subsidized up to 75 percent.

GLORIA PENNER: That's interesting. Do you have an answer to that, JW? Are out of state or foreign students subsidized by the State of California.

AUGUST: There are some programs, but it's been a couple years since I even read anything on it, so I can't honestly tell you. But there are programs that attract certain types of students to the system. There have been.

GLORIA PENNER: Okay. Well, my understanding is it -- my understanding is that there is going to be an attempt, in fact, it was said during these meetings, that more out of state students would be accepted because they do pay a higher tuition. Andrew, the -- the issue other, really, is the idea of cutting expenses. The regents voted to use a more expensive way of evaluating applicants. Why, when they're facing a severe cut, are they figuring out how to spend more money?

DONAHUE: Yeah, I noticed that in the story too. Did you know how much that was? Or how much the cut --

GLORIA PENNER: No.

DONAHUE: 'Cause the story doesn't say how much more that was going to cost. So you do have to continue with business at a certain extent, you know, if you're dealing with a $500 million deficit, and you need to put in a better program for $100,000. I don't know that that's necessarily something that gets me that angry. I would need to know more about how much it costs.

GLORIA PENNER: Right. But the purpose of it, really, is because they're trying to attract a diverse group, I guess, rather than just bringing in the GPA and the test scores, they would have other ways of analyzing whether the group coming brings to the campus everything that they feel the campus should have.

DONAHUE: Yeah, and we have to continue to try to make the system better, I think our efforts are probably better spent on focusing on things like the -- the executive salaries or things like these pension increases and the pension pleas. So I would say, let's prioritize.

GLORIA PENNER: I want to talk about private financing of the campus when we come back, but first we're gonna take a very short break, when we come back we'll take more of your calls, and talk about the whole idea of whether the university system should be going after private money to help bolster their budget rather than just capitulating, our number is 1-888-895-5727. 895-KPBS.

I'm Gloria Penner, and this is the Editors Roundtable. We're talking about the projected billion dollar deficit, the shortfall at the University of California, half of it would come from the governor's proposed budget decreases, and the other half would come from expenses that are escalating and we're trying to figure out what can be done about that, whether the nature of the university will actually change, and we did raise one issue, Bob Kittle raised that issue, by the way, Bob Kittle is where me today from KUSI, it's not a by the way. Bob Kittle is with me from KUSI, as is JW from Ten News, and from voiceofsandiego.org we have Andrew Donahue. Bob raised the idea that the voters are not going to vote to extend the tax increases that were imposed in late 2008, and if they are not extended that that would really make this situation much more severe than it now is. So I asked whether you would vote for an extension of the tax increases, and Dan from La Jolla responded. Dan, you're on with the editors.

NEW SPEAKER: Hi. Yes, I would definitely vote to extend the tax increases, because I think the public needs to be paying its way to help close the deficit.

GLORIA PENNER: Okay. Thank you, Dan. Thanks for weighing in. And let's hear from Joe in Oceanside. Joe, how do you feel about that situation?

NEW SPEAKER: Yeah, I would not vote to extend them. And the reason, particularly, regarding the University of California system, is that we're paying for a gold plated system as it is. If you look at the hierarchy locally, and state wide between community colleges, state colleges, and the UC system, the benefits, the pensions, you've mentioned that, you know, the medical care that's provided is a step up, the salaries are a step up, and not just that, but, you know, janitors, for example, San Diego City College versus San Diego State versus University of California, UC is gonna have 2 or 3 or 4 janitors for each one that they have at the city college. And it just goes up from there. You know, I use janitors as an example, but the administrators are overpaid at UC as compared to, you know, local industry, as compared to the other colleges in town. It's just a gold plated system that these people have perpetuated.

GLORIA PENNER: Okay. Thank you very much for your opinion, Joe. And so here you have it, I mean, we will see if this does go to the ballot, what's going to happen in terms of the way the voters react to it. But one of the regents, at least one of the regents wants to go in a different direction. That regent would like to go after private money from the alumni to cover the gap. Could that also change the public nature of the university system, JW? Would it be successful?

AUGUST: I don't know whether that's a new idea. I get something from SDSU every darn month asking for money, so how is that going to do it? No, I read some rich guy was willing to give a hundred thousand dollars, and let's get all on board. Great, all you guys have got lots of money, why don't you throw the money in the pot and try to save the system?

GLORIA PENNER: So a voluntary basis.

AUGUST: Yeah, a voluntary basis.

GLORIA PENNER: So in other words they are -- yeah, go ahead.

AUGUST: Well, I also want to bring up they do have quite a bit of money in their foundations. There's been legislation proposed that those foundations, and how much money they have, and who gets what at the university level from these secret foundations, be made public. You may recall, Sarah Palin, spoke up north at a university because of $50,000 from one of the foundations attached to the schools. We have no idea whether the money's coming from and who gets it and how it's parceled out. And maybe a little more transparency in higher education would make good sense. Maybe we wouldn't be in this position now if everything was more open.

GLORIA PENNER: So as Joe would put it, gold plated transparency?

AUGUST: Well, I think the UC system is gold plated, but my good friends at the C -- you know, the California State system, obviously we're just -- we're not gold plated.

GLORIA PENNER: Okay, final comments on this, Andrew.

DONAHUE: Yeah, I just don't think that that sort of system is sustainable. It requires -- I think they were hoping to get a thousand dollars from every alum. And as somebody who gets a plea from my university's foundation every month, I kind of laugh at it, because I'm still paying $400 a month just to pay off my student loans.

Gloria Penner: Okay. Bob, I'd like you to address this as part of your final comment. Again, going back to the regents, two of them are promising a dog fight in Sacramento. Considering the state budget crisis, what would a dog fight do?

KITTLE: Well, the dog fight is going to be more than a dog fight by the time this budget is enacted, it's going to be a brawl like probably we've never seen before because higher education is just one of countless interest groups that would be gored under this -- to mix all my metaphors here, gored in the dog fight because of the budget cuts. I think it's gonna be very difficult for Jerry Brown to get the budget that he has proposed through the legislature. I don't think it's going to happen. I think there will be very major changes and the likelihood is that in the end, the state will continue to muddle along in the worst possible way as it has, with huge deficits to continue to undermine the fiscal stability of the state, undermine the credibility of its bonds, etc.