LOOKING INTO THE UC BUDGET -- Report #14 (e-mail version)
by Charles Schwartz, Department of Physics, University of California
Berkeley, CA 94720. 510-642-4427 October 12, 1994
SUMMARY
Last month the UC President's staff gave the Regents a progress
report on their intensive studies of undergraduate enrollment
planning for the coming 15 years. Reports on graduate enrollment
planning are due in a few months; and some sort of policy principles
will be formulated for the Regents' approval in the spring.
The outlook is grim: undergraduate student demand is expected
to grow a lot, state funding is expected to be stationary at best,
and none of the miriad suggestions for improving the efficiency of
the University's operation hold much promise when subjected to
detailed quantitative analysis. Either the University receives more
revenue or students will have to be turned away. So the Regents
were told.
In this Report I present a simple Basic Formula for the annual
institutional cost of undergraduate instruction. This macro-model
lets one bypass the dense thicket of the administration's staff
papers and see what the essential variables are. Many of the
economies previously suggested by UC's faculty and administrative
leaders are readily seen to be trivial or irrelevant. Some of the
calculations in the staff papers are found to be wrong or seriously
biased in their assumptions.
The greatest flaw in all that work is that the most famous (and
most controversial) variable - the balance of faculty work time
between undergraduate instruction and other activities - IS NOT
CONSIDERED AT ALL.
It is this writer's view, suggested in earlier work and the
subject of continuing study, that it may well be possible to
accommodate the additional undergraduate students, at something
close to the present level of funding, without seriously damaging
the quality of the University's research mission. Even if I am
unable to "prove" this hypothesis, the UC leadership has an
obligation to explain in detail why these proposals are not viable
before they move to limit admissions to the University.
INTRODUCTION
At their September meeting the Regents had another discussion
of long range planning for undergraduate enrollment at the
University. This will be the most important issue facing the Board
this year, with repercussions for decades to come. Led by a
presentation from Provost Walter Massey, who summarized a stack of
recent technical reports by his staff that total some 300 pages of
detailed data and analyses, the Board stumbled through a discourse
that showed how little clear thinking there is about how to organize
the University for the years ahead.
Massey concluded that undergraduate demand is expected to grow
significantly through the year 2010, at most a 50% increase,
probably somewhat less than that, but in any case well beyond the
capacity of UC to accommodate, given the present and projected
environment of state funding. A long list of suggestions for
economizing, developed over the past year by the combined efforts of
UC's academic and administrative leaders, turn out to provide at
most a 5% increase in enrollment capacity.
A mantra repeated in the introductory paragraphs of the UCOP
Staff Papers is,
"The University is facing unprecedented challenges to carrying out
its traditional mission of teaching, research and public service.
Planning efforts must focus on strategies that will ensure both
preservation of the recognized excellence of UC programs in the
face of diminished financial resources, and access to these
programs by the largest possible number of qualified undergraduate
and graduate students. The University must seriously consider ALL
options for providing access for eligible students."
[Emphasis in original.]
And this was echoed by President Peltason at the September regents
meeting:
"I would say that the comments this morning are in a sense a kind
of a preliminary progress report on our evaluation of not only the
Governor's but any other suggestion we have had to improve the
delivery of education."
However, some of the most lucrative ideas for saving money and
making UC accessible to more students have not even been considered.
This Report will not try to recount, summarize, or criticize in
detail all of the documents produced by the President's office on
this subject. My main purpose is to attempt to bring some
intellectual clarity to this whole issue, letting the reader see
which are the main ingredients, which ones are irrelevant, and which
ones have been neglected or mis-handled in the official studies.
The cost of undergraduate education will be outlined in two
parts: Part I considers the annual cost of operating the University;
and Part II considers the cost of capital investments to house those
operations. [Time and Space. Physics meets accounting.] Part III
is an Appendix discussing various further details in brief.
PART I. OPERATING COST - THE BASIC FORMULA
The formula below gives the total institutional cost of
undergraduate instruction as the product of three factors.
(Total Cost to Institution) = (Number of New Admissions)
x (Graduation Requirement)
x (Unit Cost of Instruction)
The Total Cost (TC) is $ per year cost to the university for
undergraduate instruction.
The New Admissions (NA) is the number of Freshmen entering each year.
The Graduation Requirement (GR) is now set at 180 quarter-units =
60 year-units.
The Unit Cost (UC) is the cost of delivering one year-unit of
instruction to one student.
(It really doesn't matter whether you measure time in academic years
or semesters or quarters; but, for specificity, I will generally
speak in terms of years.)
What is at first surprising about this basic formula is the
fact that it does not involve the Time-to-Degree (TD), that is, the
average number of years it takes a student to complete the
graduation requirement. This fact can be understood qualitatively
as follows. If students take a longer time to complete their
graduation requirements, there will be more students enrolled at any
time (for a fixed rate of new admissions), but those students will
be taking fewer classes at any time. These two effects cancel each
other, leaving the university with the same total instructional cost
per year.
Another quantity that does not appear in the basic formula is
the Enrollment (E), the total number of undergraduate students
attending classes throughout the year. The additional relation is
E = (NA) x (TD) ; and with this one can easily derive the basic
formula itself. (See the Appendix for further details about the
basic formula.)
We will now use the basic formula to give a first assessment of
various ideas about how the University might lower its total cost of
undergraduate instruction, or accommodate a larger influx of
students at the same total cost.
A. Reducing the Time-to-Degree does absolutely nothing at all!
This is a very significant statement since so many of the
suggestions that have been proposed to the University - from UC
faculty and administrative leaders and from the state Legislature -
have focused on just this idea.
B. Reducing the number of students allowed to enter the
University cuts the total cost proportionately. This is obvious to
anyone; and it has been the solution that seems most favored by the
regents in their earlier discussions. Putting aside the many issues
of morality and politics involved here, I would just pose the
practical question: If you close the doors, who will then pay for
the continued operation of the University?
C. Reducing the graduation requirement cuts the total cost
proportionately. Thus, if one were to change from a four-year
(180-quarter-unit) degree program to a three-year (135 quarter-unit)
degree program, this would cut total cost by 25%, or it would allow
admissions to increase by 33% at the same total cost. Of course,
the UC undergraduate degree would then become quite a different
product. Note that the idea of squeezing a four-year curriculum
into three years is something different - it is just changing the
Time-to-Degree, which, we already noted, has no effect at all.
Another common idea is to have students complete some portion
of their graduation requirements elsewhere - in high school (with
advanced placement tests), at Community Colleges, at UC's Summer
Session or Extension courses. This does reduce the University's
total cost of instruction proportionately to the number of units
displaced. But the cost of that additional instruction is also
displaced, and questions of equity and quality arise. The 5% saving
estimated in the UCOP staff reports arises from a combination of
these measures.
D. Finally, one can cut the total cost, or accommodate larger
admissions, by reducing the Unit Cost of Undergraduate Instruction
at the University. This is the topic that nobody in the leadership
of the faculty and administration seems willing to consider. This
is certainly controversial, but let's start by laying it out on the
table in basic economic terms. There are three primary ways to
reduce this unit cost. (See the Appendix for further discussion.)
1) Reduce personnel costs. Of course we can't cut faculty salaries;
but we might use more low-paid instructors instead of high-paid
research professors to teach undergraduates; and we could, perhaps,
use new technologies to replace teachers of any human kind.
Questions of the quality of instruction arise most prominently.
2) Increase class size. This lets each faculty member teach more
students, lowering the unit cost per student. Again, quality of
instruction is the major issue.
3) Increase faculty courseload. Have faculty spend more of their
total work time teaching undergraduates and less doing other things.
This has a very large potential for decreasing the unit cost, since
UC faculty now spend only about 21% of their work time on
undergraduate instruction. The concern here is that such a shift
will degrade the quality of other things that faculty do at the
University - research, graduate instruction, etc. (See my Reports
#8, #9, #10 for some prior analysis.)
These last ideas are not new at all. What is needed is a
detailed and thorough analysis based upon reason and quantified
wherever possible. So far, UC's leaders have ignored these ideas or
dismissed them with the vague rhetoric of "quality."
PART II. CAPITAL COST
In the UCOP staff reports, the question of construction costs
to accommodate additional undergraduate students comes up in two
ways.
A. It has been suggested that the University can make fuller
use of its existing facilities by holding classes during the summer,
on weekends and in the evening hours. This capital idea is put down
for two reasons. First, experience shows that in the past students
have not responded very well to such non-traditional class offerings;
but if there is no alternative, i.e., if it becomes mandatory on
some equitable basis, then they may behave differently. Second, the
UCOP staff reports point out that providing more available class
space is not enough: more teachers must be hired and that costs more
money, money which they see the state as unable to provide. This
correctly links the problem of capital costs and the problem of
operating costs. However, it is a seriously flawed analysis because
it does not allow for the possibility of increasing instructional
efficiency, as discussed above.
B. This same blind spot infects the other discussion of
capital costs in the UCOP staff papers: If more students are to be
admitted, then more faculty must be hired and more space for their
offices, support staff, research labs, etc., must be constructed.
This formulation is based upon the old assumptions about the balance
between teaching and research for faculty members; but all of that
must be open for discussion, not frozen. (See more details in the
Appendix.)
PART III. APPENDIX
A. The basic formula assumes that every entering student
completes the degree program and graduates at some time. The
entering class will consist of students who will complete their
degree over various time scales; thus the Time-to-Degree is to be
understood as an average over all students but this doesn't affect
the basic formula itself. Also, students enter with different
degree requirements (e.g., transfer students come in needing to
complete only half their total units at UC) and so the product
(NA) x (GR) in the basic formula should be understood as the sum
over different student populations.
B. The basic formula should be easily comprehensible to
students at California's Community Colleges, where they are charged
for the number of units they take, regardless of when they complete
their degree requirements. It is us sophisticates at UC who may
have some trouble in learning this formula.
C. UCOP's Staff Paper #3 presents a calculation to answer the
hypothetical question, "How much additional enrollment capacity
would be generated if all regularly-admitted new domestic freshman
were to graduate in three years?" When I first read that portion I
was confused about the validity of their calculation. Now, by
referring to the basic formula, I can see that their calculation is
not just wrong, it is nonsensical: it does not distinguish between
an accelerated four-year program and a restructured three-year
program. (See my earlier discussion Part I, paragraph C.)
D. The concept of Full-Time-Equivalent (FTE) student
enrollment is regularly used in UC's budget negotiations with the
State, and this makes sense in the year-to-year process of
incremental budgeting. However, for long range planning FTE is not
a good concept because it creates unnecessary confusion. For
example, the basic formula could be re-written this way:
(Total Cost) = (FTE Enrollment) x (Standard courseload = 15 units)
x (Unit Cost)
But if you ask the questions, What is the effect of shortening
Time-to-Degree, or of reducing the number of units taken at UC?,
the answers are not at all obvious from this reformulation because
the FTE obscures those basic elements. Furthermore, the original
form of the basic formula uses NA, the actual number of new students
admitted each year, and this is the real quantity to be dealt with,
both humanly and politically.
E. The unit cost of instruction involves more than just
faculty salaries/time. There is the cost of instructional support
(TAs, etc) and of libraries that must be added in. Also, if one
needs more classrooms to accommodate more students, that will be a
new cost; but I note from the Staff Reports that classrooms and
teaching laboratories account for only 9.5% of the assignable square
feet in non-residential facilities at UC's eight general campuses.
The cost of student services at the University and the cost of
housing and dining, etc., for increased numbers of students is
important but it is not part of instructional cost; this is usually
paid for by direct levies upon the students themselves and thus need
not enter our present calculations. The question of University
"overhead", e.g. administrative expenses, must also be addressed. I
have previously opined that this is now inflated and should be cut
down; more study on this point is needed.
F. One topic that took a lot of time at the regents'
discussion was "technology and distance learning." My impression is
that there is a fundamental split on this topic. Some people
imagine this as a way for the University to save money (decreasing
the unit cost of instruction) but the faculty establishment
apparently views it only as a possible way to enhance the quality of
instruction. Dare I mention that this disparity looks like a
classical labor union dispute?
G. All my analysis so far has treated the whole University of
California as a single uniform entity; but, of course, its
individual campuses present different circumstances. Physical space
to accommodate more students is one topic that will need deeper
study. Another, more controversial, idea is that different campuses
might evolve along different academic tracks. The President has
taken a formal position opposed to this proposition but no reasoning
or analysis has been presented either for or against it.
H. I would be reluctant to apply the basic formula to graduate
instruction in the PhD programs of the University. The process of
writing a dissertation is so individual, for both student and
teacher, and so varied from one case to another that I would not
think the "production line" model underlying the basic formula is
appropriate.
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CORRECTION. In Report #12 I gave data for UC's expenditure for
Public Information activities totaling $11,863,000 in 1992-93.
That calculation left out the transfers (recharges), which are
needed to give a complete picture of the actual expenditures.
The corrected total is $26,275,000.