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Pushback on a B-School's Bold Plan

November 23, 2010

The blog of the Faculty Association of the University of California at Los Angeles features a video, labeled "a little self-sufficient music" -- the Supremes singing "Stop in the Name of Love." The clip starts not with the famous title line of the song, but with the refrain: "Think it o-o-ver."

The reference to "self-sufficient music" is a play on the plan of the business school at UCLA to stop accepting any funds from the state -- in return for greater flexibility over such matters as tuition rates. And what's become clear in the past few weeks is that the more faculty leaders think it over, the less they like the plan, which many view as privatization.

A report from the Academic Senate at UCLA this month noted that several faculty panels had reviewed either part or all of the business school's plans -- and the reaction wasn't remotely ambivalent. "Virtually every Senate body listed above, either unanimously, by majority, or by expression of concerns, opposes this proposal," wrote Ann R. Karagozian, chair of the Senate and professor of mechanical and aerospace engineering. "Many of the specific objections from Senate committees may be categorized as being financial, programmatic, or philosophical in nature. But in addition, a number of groups expressed concern that a highly expedited review was being requested for a proposal that could well set a long-term precedent for many other schools within UCLA and in the University of California as a whole. Many Senate bodies feel that a paradigm shift of such profound significance warrants a much more complete and substantive proposal as the basis for a thorough review."

Judy D. Olian, dean of the Anderson School of Management at UCLA, is undeterred. She said in an interview that there have been "misinterpretations" of her plan and that she would work hard to dispel them. "I think our main objective is to make sure that people understand what financial self-sufficiency is and is not," she said. Olian noted that UCLA's central administration had asked the business school for an answer to the issues raised by faculty members, and that she was working on one.

Still, the faculty opposition suggests, at the very least, that the idea may receive a lengthier review than might have been the case a few months ago. When Olian first discussed the idea publicly in September, she said it had been approved at the campus level and was awaiting a review by Mark G. Yudof, president of the university system.

Here's how Olian has described the plan: UCLA's business school would give up the state funds it receives for its M.B.A. program -- about $6 million out of a $96 million budget. Olian has said that the $6 million could go to other units at UCLA, and that the business school could make up the lost revenue. The business school, she said, could introduce efficiencies from being freed of various state rules and of having to wait for state budgets to be approved, and could raise out-of-state tuition -- currently about $49,000 -- to the levels of top private institutions (currently $53,000 to $58,000), while preserving a discount for in-state residents (who currently pay $41,000). Olian says that the plan is needed to recruit top faculty talent and to support the facilities and scholarships needed to compete with the top business schools in the country -- public and private.

The idea isn't unique, but is rare. The University of Virginia's business school has operated this way for a while, and Arizona State University's law school is considering such a plan. With state universities like UCLA seeing state support dwindle, many observers expect more plans like the one at UCLA -- especially for professional schools that can attract students even with high tuition rates, and that can aspire to significant fund-raising.

The Academic Senate's analysis of the business school plan questioned all kinds of assumptions. It noted, for example, that all of UCLA would applaud the business school for raising more private money to support spending that the state couldn't provide -- and that this wouldn't require a new relationship to the state. And the report said that based on UCLA's own data on business school faculty salaries, the university does quite well compared to leading private and public institutions -- with no evidence of top scholars leaving.

Many of the issues raised in the faculty report, however, were philosophical. One point of concern was whether in fact it is a fair deal for any state-supported unit to gain a level of independence just by halting the use of state funds. "There are also questions about why the ... proposal does not account for the asset value of the school and the investment value to California taxpayers that have resulted from 75+ years of state support. Several committees indicate that financial self-sufficiency should include compensation to the university and to the state for this historical investment," the faculty study says.

Other concerns have to do with the impact of replacing state funds with private support. The faculty report notes that some worry this would lead to an emphasis on teaching to the detraction of research that is part of the university's mission. Others "are concerned that the [self-sufficiency] model or similar programs could lead to further erosion of the U.C. and an abandonment of the spirit of the public university. Equally important, there are concerns about access to the University by state residents if fees for the M.B.A. and Ph.D. programs become prohibitively high.... Without a substantial increase in other revenue for financial aid, it is unclear how affordability will be maintained for low- and middle-income students."

Olian, the business school dean, said that the fundamental problem with the criticisms is that they assume that a change in financing would lead to many other changes. "This is not privatization. This is not changing the relationship between the school and the university, or the faculty interaction with the university," she said.

"All of the mission-related issues are, frankly, not accurately stated" in the faculty analysis, she said. "We will continue to be part of UCLA and part of the state," she said, with all of the commitments to public service associated with such ties.

Olian acknowledged that the business school has not seen a flight of top faculty or student talent but said that she feared for the future, given that the state does not seem likely to restore steady increases in support for higher education.

She said that while faculty members are correct to note various risks of going ahead with any change, "we look at the alternative as riskier. The alternative is to continue the current model, which is troublesome for the future."

Olian said that she continued to believe in the plan -- and hoped that after further discussion, it would advance.

 

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