The Higher Ed Austerity Deal Is Falling Apart

For years now, the main trend in public university policy has been to impose budgetary austerity on them. Regardless of the revenue level that universities seek or the efficiencies they announce, the result is always the same: inadequate public funding coupled with rising tuition and student debt.

On the surface, 2015 promises more of the same: more austerity, more fees, more adjuncts, more tech, more management, and more metrics— metrics as a substitute for money. Years of attacks on austerity economics by prominent critics like Paul Krugman have not damaged austerity politics, which favors some powerful interests and which has hardened into a political culture. Our public universities have been stuck in a policy deadlock that I think of as halfway privatization. This has meant the worst of both worlds: not enough tuition and endowment income to escape the perma-austerity of state legislatures, and not enough public funding to rebuild the educational core. 

There are signs now that this framework is coming unglued. One of them is the tuition debate that started up again at the University of California Board of Regents meeting in November 2014. 

University officials opened with their only revenue move — a tuition hike. UC President Janet Napolitano, who had been the Democratic governor of Arizona and then President Obama’s Secretary of Homeland Security, proposed an annual 5 percent hike for UC students for each of the next five years.  The state’s Democratic governor, Jerry Brown, responded by saying the hike would break an agreement in which the state is to increase California State University and University of California funding 4 to 5 percent per year on the condition that tuition stays frozen, as it had been for three years.

From there, the parties made a series of scripted points. Napolitano responded that UC couldn’t maintain academic quality with funding levels that were lower that when the recession began. The state replied that UC had more than made up for the massive cuts with its even more massive tuition increases. UC officials countered that the state’s math was wrong. An existing line was redrawn in the sand: we need more versus you have plenty. Much of the state’s top brass showed up to argue against Napolitano and the regents. Though the speeches were especially passionate, no votes were changed. The tuition hikes passed 14-7, with every politician on the board voting no.

Some editorialists were impressed that Janet Napolitano had started a new public discussion of the university’s fate, and yet the austerity script generated the standard follow-up gesture of split-the-difference.  UC officials said they would rather have the state buy out the tuition increase by adding $100 million to the general fund allocation of about $3 billion. In response, Democratic leaders hatched his-and-hers halfway measures. His, from the Democratic president pro tem of the state Senate, was a full tuition hike buyout funded by a raid on the legislature’s halfway measure of last year, a “middle class scholarship” plan, plus a hike in the triple-tuition paid by non-resident students. Hers, from the Democratic speaker of the Assembly, was half a tuition buyout linked to higher teaching loads for faculty and a gesture toward “zero-base budgeting.”

Regardless of which components prevail, the austerity outcome is already programmed: not enough money to fix basic problems. The California tuition fight is about who would pay an additional $100 million, but that comes to 1.4 percent of the university’s core budget of $7 billion, and is a drop in the bucket of its $27 billion overall budget. UC also says it has a structural deficit: exact size varies, but one estimate was $2.4 billion by 2015-16. The tuition increase (or state buyout) comes to 3.3 percent of that, so that the university system would need about 25 years of such increases to close the deficit it will have next year.

UC managers and state politicians are debating mirror versions of the same austerity molecule. Either way, academic planning is ruled by insufficient funds, and quality upgrades are kicked further down the road. The university system actually needs 16 to 20 percent annual increases in funding for five years to get back on track, and yet the budget script assures that the university will neither ask for nor receive the reinvestment to do so, defined as growing at the same rate as state personal income. The tuition debate and its larger narrative aren’t about advancing public higher education but about sustaining the austerity already imposed on it. The outcome for students, year after year, is that they pay more tuition to get less education.

And yet something has happened in the last few months. The three leading players began to tire of their roles.

First, there are the university’s senior managers. Their deal was to accept austerity, but instead they were getting insolvency. They had spent every year since 2008 announcing major efficiency programs, but political leaders were never satisfied. Operated from the Office of the President in Oakland (UCOP), these programs had nine-figure savings goals, consumed immeasurable amounts of staff time, pushed expenses onto already-suffering campuses, cost the central administration most of whatever good will had remained among the rank and file, and yet still didn’t help the university.  

One flagship efficiency measure, an IT centralization plan called UCPath, has missed all its time and cost milestones and is now being funded through borrowing. The most likely outcome is that the university will spend $220 million to save a net $5 million per year over a couple of decades while going into debt to do it. The university could get real savings through major structural simplification, but that would take knowledge, money, and trust that UCOP doesn’t have, and bottom-up initiative that it doesn’t support. All this efficiency programming has done little to close the deficit. 

Faced with weak results and mounting unpopularity, an administrative glove or two finally came off. The university’s senior budget official used phrases like “I fundamentally disagree with the notion that tuition increases have made up for cuts”— fighting words in the deference culture that normally prevails — and appeared on multiple radio and TV shows to plead the university’s case. Political leaders can keep forcing university officials to accept their lump of coal, but the change this year is that perma-austerity has undermined their united austerity front.

As for the Board of Regents, the deal was that cooperation would maintain prestige and not produce humiliation. Board members have been very good at taking their austerity medicine — with the expectation that someday it would reward them with improved fiscal health.

One sign of health would be for the state to rescue the regents from their single biggest fiduciary mistake, which was to have stopped employer and employee contributions to UC’s retirement fund and not to have restarted them for almost 20 years. But the state’s Democrats have been as unwilling as its Republicans to fund the state share of the employer’s re-started contributions, now at 14 percent of payroll, although it has always done this for the California State University system. Since the state has also been unwilling to fund cost of living increases, the result of the restart in employee contributions was a 12 percent faculty pay cut between 2010 and 2013.

The board resembles the faculty in one way, which is its lack of political clout, and they are now angrier about this than I have ever seen them. One regent described the state’s relation to higher education funding as “breach of contract,” and this was just one of many expressions of frustration and disgust. Cost-free complicity between the university board and state leaders has come to an end in California. Its days may be numbered elsewhere.

The third major player is the undergraduate student body, for whom the deal was to pay more for the same, not to pay more for less. Worried about jobs and skills, they have started to zero in on declines in educational quality. As part of the tuition hike debate, Caitlin Quinn, a student government leader at UC Berkeley, said, students “aren’t seeing this supposed quality education. I've been [at UC Berkeley] for three years and ever since I've been here students have been struggling to see the value of a UC education. We’re in huge classes. I’ve been in classes as big as 800 people. I don't think there's more than one or two professors who know me by name.” Students increasingly doubt that public universities can give them the individual attention they need to build the special capabilities now required by a permanently demanding job market.

As a result, UC students were as disgusted with the austerity Democrats who opposed tuition hikes as they were with the UC officials who proposed them. The tone was nicely captured by a UCLA Daily Bruin editorial that began, “State Senate Democrats say they ‘stand with California’s students and their families’ with their new proposal for funding the University of California.... But this is an outright lie.” 

Students were now calling not just for flat tuition but also for the public reinvestment that would rebuild quality. They were clear that no decision-maker was offering this. There was a new multilateral hostility to all of the solutions proposed by the university and the political establishment — a pox on all your houses! Events this past fall began to decouple mainstream students from the mainstream policy options in a way the country hasn’t seen since the 60s.   

The weakening of higher ed's austerity front reflects the weakening of Democratic fiscal politics. For years, Democrats called for inclusive progress without paying for it through the taxation levels of the high-growth postwar economy.  This has helped them to hang onto wealthy liberal donors and the progressive upper-middle class, but lost them the confidence of most working people.  Their “politics of drift” allowed them to coast along with Republicans on the investments of the past, even as the freeways, laboratories, electrical grid, and everything else aged and declined.

By 2000, the country no longer had the world-leading pubic infrastructure that would sustain the inclusive economy Democrats still said they wanted. Public research universities were primary victims of their austerity drift. Austerity Democrats have been as invested as Republicans in the fantasy that prosperity’s infrastructure didn’t need high levels of investment, just more techno-efficiency that somehow needed no investment itself. 

Although austerity theory still rules public colleges, three of its major players no longer project future benefit from following their scripted roles: cutting and squeezing (administration), political compliance (governing boards), and tolerance for higher tuition and debt (students). It has become clear to them that these austerity policies will never make things better. 

The decline of austerity’s political coalition offers a second chance to two other parties. One is the body of university faculty, whose senate voices have largely echoed those of their administrations. The other consists of the families of college students, who are poorly organized and have not held politicians accountable for their destructive cuts. Each has a crucial piece of the puzzle. Educational quality can’t be defined and pursued without the faculty. The full impact of student debt can’t be understood without the families who, through mechanisms like Parent PLUS loans, are now indebted for college along with their children.

Were these groups to push for real public reinvestment, they would face weaker opposition from the austerity coalition than they would have faced in the past. A strong push would make 2015 the year that the country finally started to rebuild its public universities and colleges.