Funding Strategies
Working Group
Report by Henry E. Brady
Note: This is my own personal interpretation of the Report of the
Funding Strategies Working Group. Nothing I say should be
interpreted as superseding, amplifying, or going beyond what is in
the written report.
Background
Conclusions about State Support
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State support has gone down for a long time
A large gap has begun to open up between state
support and UC expenditures
There is no indication that these trends will be
reversed
Significant steps must be taken to fill this gap
Funding Strategies
Working Group
Membership—Co-Chairs
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Steve Olsen, Co-chair – Vice Chancellor for
Finance, Budget and Capital Programs, UCLA
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Gene Lucas, Co-Chair—Executive Vice
Chancellor, UC Santa Barbara
Faculty (9 People—8 Campuses): UCB, UCD,
UCI, UCLA, UCR, UCSC, UCSB, UCSF
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Linda Bisson – Professor of Viniculture and Enology, UC
Davis
Henning Bohn, Professor of Economics, UC Santa Barbara
Henry Brady, Dean, Goldman School of Public Policy, UC
Berkeley
Sandra Faber, Chair, Department of Astronomy and
Astrophysics, UC Santa Cruz
David Gardner, Professor of Medicine, UC San Francisco
Gary Hansen, Professor of Economics, UCLA
Peter Krapp, Associate Professor, Film and Media Studies,
UC Irvine
Carol Lovatt, Professor of Plant Physiology, UC Riverside
Robert Reich, Professor, Goldman School of Public Policy
Student and Administrators (4 People and 4
Campuses): UCD, UCI, UCLA, UC Merced
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Eric Barba, Student, UCLA
Brian Gresham, Assistant Director, Capital
Planning and Space Management, UC Merced
John Meyer, Vice Chancellor for Research
Management, UC Davis
Meredith Michaels, Vice Chancellor for Planning
and Budget, UC Irvine
Regents (3) and Outside Members (4)
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Rex Hime, UC Board of Regents
Leslie Tang-Schilling, UC Board of Regents
Bruce Varner, UC Board of Regents
Daniel G. Burnham III, Former CEO, Raytheon
Robert Haas, Trustee, Evelyn and Walter Haas, Jr. Fund
Art Pulaski, Executive Secretary-Treasurer and Chief
Officer, California Labor Federation, AFL-CIO
Maurice Salter, President and CEO, Aladdin Two and
Member UCLA Foundation, Board of Directors
State Funding Principles: State Funding
Makes UC Public, Affordable, and Great
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State funding remains critical to
UC—Importance of being public
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Student fee increases cannot fully replace
state funds—UC must remain affordable
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State funding is UC’s equivalent of
endowment—It helps UC to be great.
Administrative Efficiency Principles:
Opportunities for Improvements
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Have not measured administrative performance in
the past—need a counterpart to “peer review”
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Variance in quality and efficiency of
administrative systems across campuses
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Administrative efficiencies most effective when
mandated – required by Chancellors, the
President, and the Regents
Recommendations: Two Tiers
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Immediate Adoption (6)
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Longer Term Adoption under Certain
Circumstances (3)
Immediate Adoption:
Grassroots Campaign
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1. Develop multi-year grassroots opinion leader
advocacy campaign for state support
What: Educate local public opinion leaders
 Why: Public institutions need backing of those
paying taxes and political leaders can gain from
relationship with UC – No new tax or spending
proposal can be effective without this groundwork
being laid.
 Other Alternatives: Proposition 98 type initiative;
earmarked taxes; higher education compact;
redirection of other state funds
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Immediate Adoption: Best
Administrative Practices
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2. Design and implement a system to identify,
promote, and adopt the best administrative
practice within the UC System
What: Analyze core business operations with
efficiency metrics
 Why: Administrative costs 25-30% of total –
savings here could be substantial
 Impact on Quality: Quality must be maintained and
even improved
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Immediate Adoption: Full Recovery
of ICR for non-federal Research
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3. Revise practice and policy on charging
indirect cost recovery for non-federally (state,
foundation, corporation) funded research.
What: Establish uniform and consistent policy and
practice for full recovery of fair share of costs
 Why: Currently the university often subsidizes such
research with core funds
 Fiscal Implications: Could save up to $300 million
per year
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Immediate Adoption: System Wide
Effort to Increase Federal ICR
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4. Develop system-wide team to negotiate Indirect
Cost Recovery (ICR) rates for University of
California campuses with federal agencies.
What: Get total cost recovery
 Why: UC is 25% short of full cost recovery and UC’s
rates fall 5%-10% absolute percentage points behind
other places
 Impact: Increasing ICR rates by just 5% across UC
could generate more than $70 million per year.
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Immediate Adoption: Multi-year
Plan for Tuition Increases
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5. Adopt a multiyear strategy to replace student fees
with tuition, generate new revenue to protect academic
quality, and strengthen university planning.
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What: Multi-year plan for fees and replace existing Ed Fee
and Registration Fee with a single tuition
Why: Better planning and change of misleading
nomenclature
Caveat: Tuition is not a sole solution – increased state
funding and cost savings also required
Possible Scenarios of Increased Fees
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Low Increases
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Moderate Increases
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5% per year for five years – Resident UG: $10,302 in 201011 to $13,148 for in-state in 2015-106.
Generates $445 million over five years net of aid
10% per year for five years – Resident UG: to $16, 591 by
2015-16
Generates $983 million over five years net of aid
Aggressive Increases
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15% per year for five years – to $20,721 in 2015-16.
Generates $1.63 billion over five years net of aid
Immediate Adoption: Increased Enrollment
of Non-Resident Undergraduates
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6. Add 7,600 Non-Resident Undergraduates by
2015-16.
What: Two options – As replacements for existing
California residents enrolled above 2007-08 targets or in
addition to current over-enrolled Calif. residents
 Why: Option 1 would generate $174 million in nonresident tuition and Option 2 would require $76 million
in new instruction costs for net $98 million.
 Conditions: No increase in non-resident tuition
(beyond base of resident tuition)
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Longer Term Possibility:
Pell Grant Augmentation
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7. Advocate for Federal Pell Grant Augmentations
for Universities with at least 25% Pell Grant Students
(All UC’s with undegraduates are at or near this
threshold)
What: Universities with six-year graduation rates of at
least 70% would get 50% add on; between 50% and 69%
a 30% add-on. (All UC’s over or near 70% threshold)
 Why: Encourages graduation of low income students and
supports upward mobility
 Fiscal Implications: In the $50 to $100 million dollar
range each year.
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Longer Term Possibility:
Alternate Faculty Compensation Plans
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8. Examine alternate faculty compensation
plans using non-state funding.
What: Use of non-core funding to pay some portion
of off-scale salaries.
 Why: To shift burden from student fees
 Caveats: Data are needed. Not enough is known
yet.
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Longer Term Possibility:
Differential Tuition by Campus
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9. Allow for the possibility of charging differential
tuition by campus.
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What: Differential tuitions with options for how they might
be set by a mix of actions by Regents and Campuses
Why: Campuses differ and should be allowed to find their
own mix of strategies
Fiscal Implications: Could generate millions of dollars.
Crucial Point: “The allocation of revenues from differential
tuition would have to be integrated with resource allocation
issues and with enrollment planning in order to protect those
features of campuses that allow them to attract students
paying higher tuition and to aid those campuses where tuition
discounting is required.”