Self-Sufficiency or Privatization?

In debate reflecting dilemmas of public higher education with shrinking public investment, UCLA faculty approves controversial plan to shed state support for M.B.A. program.

June 8, 2012

The Academic Senate at the University of California at Los Angeles voted 53 to 46 Thursday to approve a proposal to stop accepting any state funds for the university's M.B.A. program, and to replace those funds with tuition revenue and private support. The proposal -- the subject of intense debate for nearly two years -- now goes to Mark Yudof, president of the university system, for final approval, which is expected.

Thursday's action reversed the decision of the university's Graduate Council, the faculty body for graduate programs, which in March rejected the proposal, potentially dooming it. But faculty supporters of the plan asked for a review by the full Academic Senate, setting up Thursday's vote. The votes by the Graduate Council and then by the Academic Senate reflect competing visions for how the university should respond to a series of cuts in state funds (with more reductions looming).

A report by the Graduate Council on its decision to reject the plan said: "By responding [to cuts] with a call for changing a program’s funding model, rather than with a campaign to convince the state of the value of the University of California and its academic programs, members worry about the message such a conversion would send to the state legislature, the potential marginalization of programs entirely dependent on state funding, and the disparities that could very well result among campus programs following conversion to a self-supporting model and those that do not or cannot. Indeed, many of us feel, the proposed conversion offers a quick-fix to the current crisis, but it also compromises the virtues that we expound of a 'public education' and our commitment as UCLA faculty to the citizens of the State of California and beyond."

But in an interview shortly after the Academic Senate vote, its chair offered a different take. Asked if UCLA was letting the state off the hook, Andrew Leuchter, a professor of psychiatry and biobehavioral sciences, said, "The state has not seemed to need any encouragement or permission from us to disinvest in higher education. That process is ongoing. We need to adapt to it or to sacrifice the quality of our educational programs." He said that, to most faculty members at the University of California, sacrificing quality was a terrible option. He added that "we had to make some very difficult choices regarding the funding model going forward because of the massive disinvestment in public higher education."

The Academic Senate at UCLA meets behind closed doors, and votes are by secret ballot. Leuchter characterized the debate before the vote as "spirited," with many professors having very strong feelings.

The language used to describe the plan reflects the split at the campus. UCLA's press release announcing the vote said the vote was "not a proposal for privatization." (Supporters of the plan say it is a plan for "self-sufficiency" for the M.B.A. program and note that other some programs at the business school would retain state support.) But Leuchter acknowledged that in Thursday's meeting "there were a number of people concerned about abandonment of our commitment to public education. and that was spoken of again and again. There were some people saying this was tantamount to privatization."

Giving Up on the State

When she proposed the idea in 2010, Judy D. Olian, dean of the Anderson School of Management at UCLA, said that she needed to do something to compete with top business schools that have more control over their financial futures, and that it was clear California was not going to restore adequate levels of support.

Under the plan, the M.B.A. program would see a net gain in its budget by giving up the small fraction of its budget from the state and replacing those funds with philanthropy and higher tuition rates. Current tuition rates in the M.B.A. program at UCLA are hardly cut-rate: California residents paid $45,385 in tuition this academic year. But there may be plenty of room for UCLA to raise tuition under the new system. The M.B.A. programs at Stanford University and the Wharton School of the University of Pennsylvania will next year be charging $57,300 and $62,034, respectively.

Olian has argued that UCLA can raise tuition and also attract more private funds if the M.B.A. program is freed from state regulation over what it charges and various other state constraints. Giving up all state funds (with the idea that they would go to other UCLA programs) and making increased payments to the university's general administration to pay for expenses related to the M.B.A. program, the business school would lose only $8.8 million annually, funds that could easily be made up, officials say.

The concept has been in place for years at the University of Virginia's Darden School of Business. But while many public universities have argued that they deserve more autonomy in light of declining state support, few have proposed going as far as Virginia has, or as UCLA is poised to do.

In an interview Thursday night, Olian said that she had been confident that the faculty would back the proposal, but that she realized that there was more skepticism outside the business school than within it. "I think there are legitimate concerns about the future of public higher education, but I thought it would probably pass because it is beneficial to our students, our faculty and the broader university."

She said she believed that the school "would continue to thrive" with this approach, and that it wouldn't look radically different a few years from now. She said that there was more of a danger of significant change without the new funding model, in which case she said it would be hard to finance the M.B.A. program at the level of ambitions of its faculty members. Olian also stressed that she believed the business school would "be more of a participant in the campus," by turning over funds every year that could support "starved programs" throughout the campus. "We're very proud of our affiliation with UCLA. The question of separation is non-existent."

The Debate, the Reassurances and the Future

From the time Olian made her proposal, it has been attacked as an abandonment of the values of public higher education. Days after the proposal was made, an op-ed in The Los Angeles Times by graduate student leaders at UCLA (outside the business school) argued that M.B.A. students (and, they feared, other graduate students if the idea spread) would be forced to take out loans to cover high tuition charges. And they said it was unfair to assume that M.B.A. students at UCLA could afford private university tuition rates.

"This kind of thinking ignores those students pursuing professional school degrees as a path to public service. The president of our country is a former public interest attorney, and many important government and nonprofit posts demand instruction from business, medical or law schools. Such students are not exceptions to the rule; they make up the heart of our universities. UC administrators should not have to be reminded that pursuit of idealistic but low-paying work represents the fulfillment of UC's stated mission of teaching, research and public service," said the op-ed.

Faculty blogs, meanwhile, mixed tough criticism with humor, with one blog adding "self-sufficiency music" to its posts (The Supremes' "Stop in the Name of Love," presumably addressed to university committees reviewing the proposal, and Sinatra's "My Way," reflecting the business school's perceived ethos).

But as the debate progressed, some faculty concerns were alleviated with a series of pledges, and that process continued up until Thursday.

Leuchter also said that one of the first questions asked at Thursday's meeting was whether a vote in favor of the plan would lead to many other such proposals. He said that despite such worries about the slippery slope, "quite frankly, Anderson is probably one of the only units if not the only unit that could pull something like this off." He said that the deans of UCLA's medical and law schools "don't really seem to have a lot of interest in going down this path."

But even as administrators were reassuring faculty members that there were not immediate plans to trade state support for more autonomy in other programs, there were signs that the M.B.A. program may not be the last. In fact, officials have said that the business school may well propose more such programs. And one of Thursday's announcements was that the university administration and Academic Senate agreed to create a joint task force to set "principles to guide the development and assessment of potential self-supporting degree programs."

And other universities can expect these debates too. Olian said that she has heard from deans at other universities interested in this model and expects to see it proposed elsewhere. "The other 49 states are also in this predicament," she said. "The fact is that we cannot just have the old model of public higher education, and one of the changes is going to be this self-supporting model."

She added: "It's not going to fit everyone, but this will fit some other schools, sometimes business schools, sometimes law schools, sometimes a dental school.... There is no way that business can be as usual."


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