Davis Faculty Association

Texas can see opportunities where California can see only problems. We may have exchanged one Texan for many talented Californians.

From:
http://www.statesman.com/opinion/content/editorial/stories/2009/08/12/0812barachas_edit.html

Texas universities should capitalize on California’s budget shortfall

The emergency budget deal that Gov. Arnold Schwarzenegger signed two weeks ago for California might bring to an end that state’s 50-year run as the home of the nation’s strongest public universities.

The deal cut $2.8 billion from California’s higher education budget. That’s more — a lot more — than the entire budget of the University of Texas at Austin. Combined with other economic factors, the result is an $813 million (or 20 percent) budget shortfall for the flagship University of California System.

This is a tragedy for California. Especially if Texas seizes the remarkable opportunity it presents.

Why? Because this crisis will hollow out the University of California’s most important asset: its world-class talent.

California now can’t compete in the global market for the best faculty. The University of California at Berkeley — perhaps the greatest public university in the world — usually hires 100 faculty members each year. This year, it hopes to hire 10. The University of California at San Diego — a bioscience powerhouse — will hire no new faculty. The University of California at San Francisco — a top-five medical school — will reduce its faculty by almost 15 percent.

Moreover, cost-reduction measures aimed at faculty and staff (such as pay cuts and furloughs) are expected to generate $184 million in savings. But, according to the chancellor at Berkeley, this hurts their competitiveness by about $15,000 per faculty member. This environment — dwindling academic staffing and therefore capability and reputation, resource constraints, pay cuts — will encourage the best faculty, especially the best young faculty, to leave the state.

None of this would be fatal if it were just a response to a cyclical downturn. Universities, including the University of Texas, go through tough patches on a regular basis. They tighten their belts and then recover as the cycle improves. But California’s financial crisis isn’t cyclical. It’s structural — the connection between California’s politics and California’s economy is broken.

So where’s the opportunity for Texas?

At the same time that California politicians are unable and unwilling to support higher education, Texas has increased its investment. The recent legislative session boosted state support for all higher education by $1.3 billion, or 11 percent. The University of Texas System alone will receive $107 million, or 7.2 percent more dollars, for its academic institutions such as UT-Austin and $225 million, or 13.2 percent, more for its health-related institutions. Our state and its universities have dominant income statements and balance sheets.

This means that we can compete for talent when California can’t. Even if we do nothing but let the normal hiring markets work, Texas’ already strong universities will probably gain more talent than they would otherwise. We will move up the ranking tables.

But this economic crisis might present Texas with a once-in-a-century opportunity to become the undisputed home to the best public universities — and university systems — in the world.

So shouldn’t we double down? The payoff would be enormous.

Silicon Valley has been fueled by the University of California. UC student and faculty start-ups have contributed more than $250 billion in what venture capitalists call “distributed value” to the U.S. economy. The biotech cluster around San Diego is largely a product of UC-SD. UCLA anchors the health care and medtech industries in Los Angeles. UC faculty or graduates founded an amazing one out of every six biotech firms in America.

Adding impact like this to the already impressive contributions of Texas’ excellent universities could transform our economy.

It won’t be hard to find leaders who like the idea of catapulting ourselves over the University of California System. But it might be hard to find the first and most important ingredient for success: the political will to invest the kind of money it will take. And it will take a lot of money — even more (much more) than we have already committed.

So the question before our elected and appointed leaders isn’t whether they’d like to be home to the greatest public universities on the planet. We can do that now, within a decade. It’s whether, at this historic moment, they’re willing to make it happen.

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Barchas is director of Austin Technology Incubator and associate director of the IC2 Institute at the University of Texas.

In case you missed it, UC is planning for over $1 billion in capital works by using bond sales. UCOP is not forthcoming on details.

From:
http://www.universityofcalifornia.edu/news/article/21671

UC issuing bonds for capital projects

The University of California released the preliminary official statement for approximately $1.050 billion in taxable, federal stimulus Build America Bonds and approximately $325 million in tax-exempt bonds today (Aug. 11). Proceeds from the bonds, scheduled to be sold to the public the week of Aug. 17, will help fund completion of numerous projects already under construction.

Construction to be funded with proceeds from the bonds includes seismic and life safety construction projects, student housing and other revenue-generating campus facilities, classrooms, research buildings and deferred maintenance.

“Funds from our bond sales will support projects benefiting students, faculty, researchers and the public while boosting employment in the construction industry and resulting in facilities to be staffed by university employees,” said UC Chief Financial Officer Peter Taylor.

The proceeds from the sale of Build America Bonds and tax-exempt bonds can be used only for capital projects. The taxable Build America Bonds carry higher interest rates for UC than tax-exempt bonds, but the higher rates will be offset by a federal subsidy covering 35 percent of qualifying interest costs. The result is a lower all-in interest cost, which includes the bond sale expenses and commissions, than if the bonds were sold at tax-exempt rates.

The bond sales will make it possible to move forward at all 10 UC campuses with approximately 70 projects, most of which are already under construction. Repayment sources for the financing have been identified, and many of the projects are expected to help generate revenues.

Among projects to be funded to completion are a life sciences building and police station at UCLA; a health and wellness facility and physical sciences building expansion at UC Davis; a biomedical and health sciences construction project at UC Berkeley; a cardiovascular research building at UC San Francisco; and campus housing at UC San Diego.

In addition to long-term revenue bonds, funding sources for facilities also include private gifts specifically designated for construction or renovation.

The preliminary offering document for the approximately $1.4 billion long-term bond sale was released as UC’s strong credit ratings were affirmed by Moody’s Investors Service (“Aa1″ rating with stable outlook) and Standard & Poor’s (“AA” rating with stable outlook).

The Moody’s report, published Aug. 11, noted the impact of the state’s fiscal crisis on the UC system and stated that “despite expectations for rising capital investment and debt, we believe management and the board (of Regents) will remain prudent and focus on utilizing debt strategically in a challenging economic environment.”

With high credit ratings providing efficient access to public capital markets, the University of California also used commercial paper – short-term notes with currently advantageous interest rates – for a transaction with the state last week that facilitated completion of voter-approved building projects at eight campuses. The state had suspended funding of vital capital projects essential to UC’s education, research and public service mission. The university raised $199.8 million through the sale of short-term commercial paper and purchased a state general obligation bond, enabling the state to resume funding of the most time-sensitive projects. The state is obligated to repay the money to UC, with 3.2 percent interest, within three years. Interest rates on the commercial paper issued by UC to fund the purchase of the general obligation bond are lower today than the bond-related interest to be paid to UC by the state.

In addition, UC used commercial paper this year to manage cash flow while awaiting deferred payments from the state for operating expenses. Once the state makes a payment to the university, UC expects to pay down a corresponding portion of its outstanding commercial paper.

The university, however, does not intend to borrow money to cover costs without an identified repayment source, or to replace the more than $800 million eliminated from the state’s core funding to UC, Taylor said. To use such a method to avoid furloughs or other spending cuts at campuses, in effect, would create indebtedness to pay operating expenses without a means to repay it, he explained.

Here’s an Op-Ed about the privatization of UC written by UCSB professor Robert Williams for his local paper. It appeared this past Thursday, the day Yudof showed up in town for a luncheon hosted by local businessmen:

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It is ironic that University of California President Mark Yudof will be the keynote speaker at the “Spirit of Small Business” luncheon today at the Doubletree Resort. Yudof is the architect of the massive cuts recently authorized by the Regents of the UC system. Since UCSB is the largest employer in Santa Barbara County, the case could be made that he has done more to devastate the economy of our region than anyone in recent memory.

The public usually does not pay much attention to what goes on in the ivory tower of academia, but it needs to understand what is happening to the UC system. The current “crisis,” widely thought to be the inevitable result of the cutbacks in funding provided to the University by the State, is in fact the work of the Regents. Evidence suggests that even with the State cutbacks, the UC system is in far better financial condition than its official spokespeople are claiming. The UC’s bond rating was recently affirmed as “stable” owing in part to a “sizeable balance sheet that remains highly liquid, with $5.4 billion of unrestricted financial resources ($6.5 billion excluding post-retirement health liabilities) and active treasury management monitoring a short-term investment pool exceeding $6 billion.”

How can the University have such resources at its disposal when, for years, the amount of the State budget allocated to it has been shrinking? Because since the 1980’s, the Regents have been pushing the University toward privatization, aggressively soliciting investments from industry and business, as well as donations of the kind that all colleges and universities solicit from people like their alumni. They have deliberately sought to reduce the University’s dependence on the State, so it is hardly surprising that the State should have reduced its allocations to the University. All during the ‘90’s and well into the new millennium, the Regents were boasting about how successful their efforts had been and how much money they had taken in, yet now they cry poor, and are prepared to slash the salaries of their employees or to lay many of them off, to cut programs of vital necessity to students, and, at the same time, to raise student fees.

The public needs to understand that the Regents, the twenty-six people who ultimately control the UC system, are not professional educators; almost all of them are political appointees. They are mostly very wealthy business people, strong supporters of Governor Schwarzenegger, and believers in a rather primitive idea of the providential mechanics of “free” markets. In their efforts to privatize the University, they have sought to run it, not as a public resource, dedicated to the education of the people of California and the pursuit of knowledge, but as a business venture, an institutional platform on which to establish profit-making enterprises that will benefit primarily the interests of big-business, and only secondarily – in “trickle-down” fashion – the State and its citizens.

In refusing to draw upon the funds they have accumulated or to redirect money from revenue-generating operations such as hospitals and sports activities, the Regents have shown themselves for what they are. They claim that such money cannot be touched because it has been committed to specific projects, but they are the ones who determine the conditions upon which external funds are accepted and allocated. Yudof has repeatedly claimed that the money is committed, and some of it is, but a huge amount is not: as the bond rating says, the University holds “$5.4 billion of unrestricted financial resources.” The Regents are simply unwilling to touch the assets they have amassed for their profit-making ventures or to risk giving pause to future investors; they are simply stonewalling to protect their private interests. They are using the current economic downturn as a plausible excuse to make cuts they have long wanted to make as part of the privatization process. Far from being measures of last resort, enacted out of desperate necessity, these cuts are a cynical and ruthless coup de force, an effort on the part of the Regents to advance their agenda at the expense of their employees, the students, and the people of California. Their conduct represents a monumental betrayal of the public trust, comparable to what we have seen happen at Enron and at Wall Street banks and investment firms.

These cuts do not just impair the way the University works, they fundamentally redefine what it is: they mean the end of the promise that the UC had always offered, of access to an excellent education for all qualified students no matter what their economic background. Delivering on that promise for decades, the UC created a large and well-educated workforce that powered California’s extraordinary prosperity and animated its vibrant culture. Make no mistake: these cuts will have profound and long-term consequences for the quality of life; they will affect everyone who lives here. There are plans to close some of California’s parks temporarily in response to the budget crisis: well, imagine if Yosemite closed, not just temporarily, but was sold off to developers and turned into a cluster of gated communities. The selling off of the UC system is just as destructive a treatment of just as precious a resource.

As you know, a commission on the Future of UC has been instituted by Chair Gould of the Regents. Its membership has caused some real concern. CUCFA and Faculty Associations have offered the following input to Gould and Yudof:

August 10, 2009

Dear UC President Yudof and President of the Board of Regents Gould,

As officers of the Council of University of California Faculty Associations (CUCFA) and Chairs of several campus Faculty Associations, we see great value in your plan to appoint a Commission to develop a vision for the future of the University of California that “will reaffirm UC’s role in sustaining California’s economy and cultural life while recognizing that our limited state resources require us to be creative and strategic in meeting that mission.” Such a Commission has the potential to chart a path that will enable you and other university administrators to build public support for a strategic plan to put the university back on a firm financial footing.

We are, however, very concerned about several problems with this plan that we believe will compromise the Commission’s ability to deliver a report that will actually unify faculty – and the public – and encourage them to come together in support of a common vision. This letter summarizes our concerns and our proposed solutions.

First, like the Academic Senate, we are concerned about the failure to include representatives from UC’s teaching faculty and from its Colleges of Letters and Sciences in the appointment of the members of this Commission. We believe that the Commission must reflect the full scope of the disciplinary excellence that the university embodies. The vast majority of the university’s undergraduate and graduate students receive its degrees from our Colleges of Letters and Sciences. Unless their interests, as well as those of the faculty who teach in these schools, are fairly represented on the Commission, we fear that many will refuse to support the Commission’s report on the grounds that the Commission excluded important university interests.

Second, we are concerned that appointments to the Working Groups will be made in the same, non-consultative way as the original appointments to the Commission, and they will as a result turn out to exhibit a similar failure to represent all university interests.

Third, we are concerned that nothing in the charge to the Commission suggests that you are authorizing the Commission to consider developing strategies that would enable the university to reinstate the commitments sanctioned by the state’s Master Plan for Higher Education. The charge seems predicated on the idea that the continuing decline in state funding is inevitable and there is nothing that can be done about this. Thus it seems to be designed to move the university toward a pre-determined future that is not in alignment with what many consider to be in the long term economic, social, and political interest of the state of California.

In light of these concerns, we urge you to make the following changes to the Commission plan.

1. We urge that six additional members be appointed to the Commission who are teaching faculty who currently teach and do research in the humanities, social sciences, and sciences. Two faculty members from each of these disciplinary areas should be appointed, in order to assure that the interests and perspectives of all are fairly represented in the deliberations of the Commission.

2. Because the Commission is preparing a vision for the future, we urge that no retirees be appointed to these new positions. We also urge that three Associate Professors be included among the appointments, to ensure that the voices of younger faculty with stakes in the long term future of the university are heard.

3. We urge that all appointments to the Working Groups be made with an eye toward ensuring there is an even balance between members who represent university administrators and teaching faculty and an equally even balance between the professional schools, the humanities, the social sciences, and the hard sciences. Like the Commission itself, the Working Groups must represent the full range of faculty and student interests and the wide variety of disciplines supported by the university, not just those of a privileged few.

4. We urge you to consult with the officers of the Academic Senate as well as the officers of CUCFA regarding these appointments.

5. Finally, we strongly urge that you broaden the Commission’s charge to include a mandate to provide the people of California with a clear understanding of the hard choices and trade offs the University faces going forward as it decides whether to 1) continue with the status quo; 2) privatize while maintaining quality; or 3) work to reinstate California’s historic commitments to the Master Plan, including restoring per student public funding to 2001 (or earlier) levels. The Commission should be charged with developing strategies for going forward with all three options and for comparing the costs and benefits of each. In addition, the charge should include putting on the table all the assets and property available to the Regents, including the revenue flows available to support the university’s capacity to bear debt.

In conclusion, the Commission on the Future of UC has a moral responsibility to educate the people of California about the full range of hard choices they must make about whether and how to fund public higher education. The Commission has a duty to make sure that the public fully understands the trade-offs to the state economy and social welfare of choosing one future rather than another. No matter what kind of vision the Commission produces, it will inevitably stimulate public debate. It is essential that this debate be as fully informed as possible.

The Commission’s success will depend on its members’ ability to develop a vision plan that is supported by all those who care about and have a stake in the university’s future. This requires that the members of the Commission and its Working Groups be appointed through a process that all stakeholders agree is legitimate and fair. It also requires that the mandate reflect the enormity of the challenge and the complexity of the choices before us.

Sincerely,
Robert Meister, CUCFA President
Stanton Glantz, CUCFA Vice President of Health Sciences
Joe Kiskis, CUCFA Vice President of External Affairs
Shelly Errington, Chair of the UC Santa Cruz Faculty Association
Warren Gold, Chair of the UC San Francisco Faculty Association
Ian Kennedy, Chair of the UC Davis Faculty Association
Christine Rosen, President of the UC Berkeley Faculty Association

cc: Mary Croughan, Chair of the UC Academic Senate
Henry Powell, Vice Chair of the UC Academic Senate

We have learned via the UCB Senate of votes by the UC Senate with respect to furloughs and the UC Commission on the Future. We pass this on for your information.

Begin forwarded message:

I’m writing to pass on some immediately good and useful news. The UC Senate Academic Council (the executive body of the systemwide Senate, composed of the 10 Senate chairs plus some committee chairs) voted unanimously yesterday for two resolutions:

(1)  requesting systemwide implementation of 6 days of teaching-day furloughs, and permission for campuses to have up to 10 days of teaching furlough;

and (2) requesting that three faculty representatives be appointed to the Gould Commission, specifically faculty from L & S, with undergraduate teaching experience.

Mark Yudof indicated at the meeting that he was receptive to both measures — “just tell me what to do,” he said – (NOTE – MARY SAID HE WAS RECEPTIVE TO TWO NEW MEMBERS NOT THREE) and UC Provost Larry Pitts has already begun to form a working group to figure out how to implement the furlough policy in light of this and other faculty concerns.  I’ve pasted in below the text of the resolution on the furloughs.  (I should add that at Berkeley we are already moving into place a policy the Senate recommended last year, of changing the last 3-5 days of podium instruction each semester into “Reading, Recitation, and Review” days, when attendance by students cannot be compelled, but study sessions and extra office hours can be held.)

On the Gould commission, while the decision on membership is up to the Regents, there’s good reason to hope for these additions.  The current membership also appears to be somewhat in flux, with a result of less dominance by professional school representatives.

Furloughs on Instructional Days

ACTION: Council unanimously: (1) requests that the Executive Vice President for Academic Affairs institute a systemwide standard of six furlough days assigned to days of instruction over the nine month academic calendar; and (2) recommends that he approve campus requests for changes to their academic calendars that place furloughs on specified instructional days for up to 10 days pursuant to his authority under delegation of authority 0556 and SOR 100.4(h). Council recognizes the faculty’s obligation to provide high quality instruction to students. We strongly recommend that the learning objectives remain relatively constant in the face of these reductions and that faculty be permitted to design alternatives to promote this end.

ACTION: Council unanimously voted to recommend that the Senate, in tandem with the administration, commit to reexamining the definition, number, and character of days of instruction.

Furloughs on Instructional Days

ACTION: Council unanimously: (1) requests that the Executive Vice President for Academic Affairs institute a systemwide standard of six furlough days assigned to days of instruction over the nine month academic calendar; and (2) recommends that he approve campus requests for changes to their academic calendars that place furloughs on specified instructional days for up to 10 days pursuant to his authority under delegation of authority 0556 and SOR 100.4(h). Council recognizes the faculty’s obligation to provide high quality instruction to students. We strongly recommend that the learning objectives remain relatively constant in the face of these reductions and that faculty be permitted to design alternatives to promote this end.

ACTION: Council unanimously voted to recommend that the Senate, in tandem with the administration, commit to reexamining the definition, number, and character of days of instruction.