UC Berkeley on May 29, 2024   

Every meeting tells a story as Rod Stewart once sang, more or less.  What stories have UC’s Office of the President and Board of Regents been singing when they met every two months?  Side A in November was “protecting student affordability.”  Side B was their perennial favorite, “budget rules everything.” The bonus track, unadmitted, was “stagnation conquers all.”

 

Fiscal stagnation means permanent austerity and the damage past and future appeared in the unscripted parts of the story in the public comment periods.  There some speakers opposed the termination of the campus hiring program associated with the President’s Postdoctoral Fellowship Program (PPFP). This seems to have been prematurely announced / decreed by the systemwide Provost Katherine Newman to a group of Executive Vice Chancellors, who brought the decision as an accomplished fact back to their campuses, which ignited a protest campaign from faculty, staff, PPFP alumni, academic consortia and, apparently, an unusually large number of chairs, deans and other administrators. The upshot was a letter from UC President James Milliken stating that reports of the death of PPFP’s faculty hiring incentives were greatly exaggerated. This was a real success for the protests, however unacknowledged by the president.

 

UCI May 25, 2018   

We saw in Part 1 that UCI Finance attributes losses to the Schools –the academic core—rather than to the non-core or medical center activities associated with research and various auxiliary services.  We also noted that in FY23 UCI needed to find $132.3 million in institutional funds to cover research costs. One result is unfortunate: dramatic cuts are coming to the core. 

 

Non-core and UCI Health may be conducting layoffs as well, but I haven’t seen any indication of this. The UC rule of thumb has been cuts to the educational core come only as a last resort.  It’s often honored in the breach, and I don’t see that UCI is following it now. 

 

UCI’s core funding is governed by a new Budget Model and multi-year planning process. It was tried out in 2024 -25 (FY25) and has been modified for the upcoming year (2025-26 or FY 26). 

 

Mosteiro de Santa Clara-a-Nova,
Coimbria, Portugal on April 26, 2025   

by Trevor Griffey, UC Irvine

 

Before 2025, California Governor Gavin Newsom developed a reputation for being a modest advocate for public higher education compared to his predecessors. This year, he proved that this reputation depended on flush state budgets, not on principle. 

 

When Newsom first came into office in 2019, the state had a projected $20 billion surplus, which allowed Governor Newsom to substantially boost spending for public higher education as part of what he called a “California for All” budget for 2019-20. 

 

And in 2022, with the state of California still receiving substantial CARES Act funding from the federal government, Newsom negotiated a 5-year “compacts” with the University of California and California State University systems that committed him to advocating for 5% annual increases to UC and CSU budgets. In exchange, the school systems committed to increase enrollment of California residents and increase student retention and graduation rates.

 

Though the compacts were legally nonbinding, they promised a sense of stability and modest recovery to UC and CSU after decades of inadequate and unpredictable funding. Unfortunately, they would soon be shredded because of a catastrophic accounting error.

 

Years of Austerty to Pay for Budget Mismanagement

 

According to CalMatters reporting, during the same legislative session that Governor Newsom negotiated the compacts, budget analysts working in his Department of Finance massively overestimated tax revenue for future years. They treated an anomalous spike in income taxes as normal, and over-estimated state revenue in future years by $200 billion per year. Legislators relying on these projections believed that they were balancing the state’s budget in 2022, and thereby set the state on a course to spend hundreds of billions of dollars more than it would collect in taxes. 

 

As the effort to undo the damage of faulty budget projections continued into 2024, Governor Newsom proposed “deferring” funding increases in the compact to future years. UC and CSU leaders successfully negotiated to receive a modest increase to their general funds in 2024-25, but in exchange for accepting an 8 percent cut in 2025-26. Since the Governor and the state legislature were also proposing an 8 percent cut to other state agencies, the shared sacrifice seemed fair. The compact was temporarily saved, but the Governor’s commitment to it was effectively over.

 

Governor Puts Majority of Budget Cuts Onto Public Universities

 

Budget cuts negotiated in 2024 seemed like a done deal. Then something unexpected happened: new, more optimistic revenue forecasts came in, and the state of California entered 2025 with a projected $363 million budget surplus.

 

The Governor could have proposed to use some of this money to give a reprieve to the UC and CSU systems, or try to sustain the compact another year. 

 

Instead, the Governor’s January budget proposal reduced planned cuts to state agencies, while leaving the 8 percent cut and compact deferral in place for UC and CSU. 

 

As the Legislative Analyst Office has highlighted, this move increased state government spending by $2.4 billion over the 2024 budget deal. The Governor also proposed increasing discretionary spending by $507 million, and proposed $150 million in new tax breaks for 2025-26.

 

To pay for this new spending, as well as cover billions of dollars of unexpected Medi-Cal expenses and rising costs for other programs, the Governor proposes to withdraw state reserves by about $7 billion in 2025, leaving $17 billion for next year. Remarkably, the Governor did not propose using any of those reserves to prevent or reduce cuts to public universities.

 

Indeed, whereas the State’s Special Fund for Economic Uncertainties is normally kept at $3.5-4 billion, the Governor proposed to increase that fund to $4.5 billion. If the Governor had simply thought to keep it at a normal $3.75 billion, he could have eliminated cuts to the UC and CSU system entirely for 2025-26. 

 

The rhetoric about the state budget in Sacramento is pessimistic. Concern that Trump’s reckless actions will weaken the economy further add to a sense of foreboding. Cuts to essential services seem inevitable, and this rhetoric of inevitability undermines politicians’ willingness to vote against the Governor’s proposed budget.  

 

Staff for the California Assembly’s subcommittee on education finance have instructed legislators that even though “CSU appears to be facing a fiscal crisis,” and “UC clearly faces significant financial challenges,” politicians should focus their hearings less on stopping the cuts and more on how the school systems “will weather increasing costs and potentially declining state and federal revenue.” 

 

This fatalism is baffling— more cowardice than analysis.  Decisions made by the Governor demonstrate that the need for cuts to higher education has been manufactured by treating UC and CSU differently than other state agencies. While state budget cuts may be necessary, they are being spread unevenly for political reasons, not financial ones.

 

As Jason Sisney, the budget advisor to the California Assembly Speaker, recently wrote, the July 2024 budget deal was that budget cuts would be equitably distributed across state agencies, and UC and CSU cuts would make up 22 percent of the state’s projected budget shortfall. Instead, Governor Newsom wants to increase spending, increase tax breaks, reduce cuts to state agencies, drawn down reserves, and still leave cuts to UC and CSU in place to cover 53 percent of the state’s resulting budget deficit. 

 

In other words, the Governor is proposing balancing the state’s budget on the backs of its four-year college students. This will take the form of increased class sizes, increased tuition, and increased debt, and possibly even one or more CSU campus closures and mergers. 

 

Can Democrats Stand Up to Their Governor?

 

On April 25, 2025, State Senator Catherine Blakespear, who describes UC San Diego as “in the heart of my district”, sent an email to constituents titled “Fighting for UC.” In it, she decried the Trump administration’s research cuts to UCSD, and pointed out that UCSD had already implemented a hiring freeze and was reducing graduate student enrollment. 

 

What Blakespear failed to mention is that she has declined to sign onto a letter from more than 60 of her colleagues in the state legislature opposing cuts to the University of California’s budget. In fact, she didn’t mention the Governor’s proposed budget cuts at all, or encourage her constituents to speak out against them. 

 

Blakespear made it seem as if UCSD hiring freezes and budget cuts were coming from the federal government controlled by Republicans, when much if not most of it is currently coming from the state government controlled by Democrats.

 

Like many Democrats, Blakespear is happy to oppose Donald Trump’s policies. But when it comes to standing up to a Democratic Governor, will she or others really “fight for UC”?

 

In my conversations with multiple state legislators this term, both Republican and Democrat, I have yet to find a single one who wants to cut the UC or CSU budget. I have yet to find a single one who wants the quality of instruction to go down while the cost of tuition goes up. 

 

Many California state legislators graduated from one or more public colleges or universities in the state. They know that California voters are mostly proud of their public higher education system, and see it as a core part of the services that the state provides.

 

And yet, when you ask a California state legislator if they’d vote against a budget that includes cuts to the UC and CSU, most Democrats— even those who sign letters opposing the cuts— will tell you that they have no choice but to vote for whatever budget the Governor, the Assembly Speaker and the Senate leader negotiate behind closed doors. Their ability to move legislation requires ceding their agency on the budget, or else be ostracized by their party leadership. 

 

When you meet with the staff of the Assembly or Senate leaders, you get the reverse message: the leadership needs to hear as much as possible from members before they head into negotiations about the need to protect higher education. 

 

Few will commit. Almost everyone is equivocal. One legislator I met with repeatedly asked if we could talk about how the state legislature could oppose Trump’s attacks on higher education, so we could avoid discussion of the state budget altogether.

 

And some share legislators whispers that because the Governor provided a 6 month delay to people impacted by wildfires to file their income taxes, and a 12 month delay to file their property taxes, his “revised” budget proposal, coming very soon, is likely to be even worse. 

 

Not treating delays in revenue collection as shortfalls is also somehow off the table. 

 

Taking their cues from elected leadership over the past couple years, UC has already increased non-resident student tuition 10 percent, and the CSU system is in the midst of raising tuition 34 percent over 5 years. Who knows what more may be coming?

 

Fighting for Higher Ed at the State and Federal Level

 

Shared sacrifice may be necessary during times of budget woes, even ones created by administrative error. Yet we as college teachers, students, staff and community members need to tell our politicians that balancing the budget on the backs of college students is totally unacceptable. 

 

For decades, politicians across the US, regardless of political party, have consistently raided the budgets of their public universities during recessions, or to cover the rising costs of health care, corrections, and other services they don’t want to tax people for. Politicians may publicly bemoan tuition increases. But they secretly depend on increasing student debt to balance state government budgets.

 

That game may be coming to an end. It ultimately relies upon federal grants and loans to students that Republicans are threatening to eviscerate in what the Debt Collective has called “the most dangerous higher education bill in history.” And it relies upon students believing that the inferior education provided to them in increasingly large and online classes is worth going into debt.

 

It's up to campus labor unions to invest their resources into organizing not just their own members but organizing students and community members to contact their legislators to oppose state government budget cuts.

 

It would be great if the defense of public higher education only required standing up to Donald Trump. But for now, we also have to stand up to Democrats whose support for public higher education is always hostage to their other priorities.

 

Contact your legislator to Stop the Cuts!

·      UC-AFT: For teachers and librarians represented by AFT

·      Teamsters: For UC and CSU clerical workers and building trades

·      University of California: https://www.universityofcalifornia.edu/get-involved/advocate/state-budget

·      California State University: https://www.calstate.edu/impact-of-the-csu/government/Advocacy-and-State-Relations/Pages/Budget-Advocacy.aspx

East Beach, Santa Barbara, Christmas Day 2024

THE PLUTOCRATS’ NEED TO NEVER BE CRITICIZED, LIKE, EVER.

'It’s not even [plutocrats'] supposed lack of impunity that enrages them against their “enemies.” In fact, Democrats have given the tech bros and other plutocrats de facto impunity for years. Obama failed to hold any of the Wall Street plutocrats accountable for the fact that they brought down the world economy in 2007-8. In fact, he bailed them out.' 

. . .

 

‘No, what really enraged the Wall Street plutocrats against Obama was not that he held them to account, which he didn’t, but that he criticized them. He called them “fat cat bankers.” And in their rage at Obama’s insult, they threatened to seize up the economy again by refusing to loan money. They were still enraged even after Obama backed off his remarks. This is what you get when you join immense wealth and unaccountable power with infinite narcissism.

 

‘The authoritarian-loving tech bro set is no different. They already have practically unlimited wealth and impunity. What these wounded narcissists demand is to be worshipped, Ayn Rand style. Democrats, liberals, academics will never give that to them. They are too prone to fact-checking, too skeptical, too critical of the established order that put the plutocrats on top.

 

‘But Trump is happy to flatter the tech bros and all their malignant prejudices if they show love for him in return. Never mind that Trump’s flattery is entirely transactional. Narcissists don’t mind if the flattery is conditional, insincere, or even created by themselves.’

...

‘Where will this end? Rousseau, in his Discourse on the Origins of Inequality, argued that the central psychosocial motive driving inequalities of wealth and power is the desire for superior esteem. People compete to acquire more wealth and power than others, because that is what people come to admire above all as inequality increases. (As early 20th century oil magnate Haroldson L. Hunt said, “Money’s just a way of keeping score.“)

 

‘Rousseau claimed that, in the absence of a republican social contract putting brakes on inequality, the rise of private property and commercial society will lead to runaway inequality and ultimately to despotism. In the end, even the rich will become slaves to the despot, forced to bow and scrape before him.

 

‘We are even seeing it now, before Trump has been sworn in, much less crowned.’

 

SOURCE: Liz Anderson, Crooked Timber

 

AUSTERITY YESTERDAY CREATED EUROPE’S WEAKNESS TODAY

 

'This decline is not the result of a political law of nature. Instead, Europe’s current political constellation owes much to a cohort of politicians and officials who held sway in the 2010s across the continent. Following Angela Merkel’s lead during her 16-year stint as Germany’s chancellor, it was they who set the terms of European politics that have now come back to haunt policymakers. Their response, for instance, to the “euro crisis” — the seemingly never-ending financial troubles that followed the crash of 2008 — was to offer a damaging blend of moralism and technocracy.

 

'Doubling down on punitive austerity measures, Jeroen Dijsselbloem — Ms. Merkel’s lieutenant as head of an informal grouping of Eurozone finance ministers — claimed that the debt-ridden governments of Southern Europe had wasted their money on “schnapps and women.” For his part, Jean-Claude Juncker, then chief of the European Commission, admonished Greeks that there was “no need to commit suicide because you are afraid of dying.” Led by Ms. Merkel, Europe’s politicians insisted on obeisance to financial markets and European etiquette, no matter the consequences.'

 

SOURCE: Anton Jäger and Dries Daniels, New York Times

 

THE SOLAR BOOM HAS NOT BLOCKED THE COAL BOOM IN CHINA

 

 

 

SOURCE: International Energy Agency via Ed Conway, Twitter

 

CORPORATE-OWNED JOURNALISM IS ESPECIALLY VULNERABLE TO TRUMP 

 

'Without reflection, [The Washington Post story, "Trump signals plans to use all levers of power against the media"] treats the plight of giant media companies as the same as its impact on journalism.

 

'The article adds a few new details about why a corporation built off nearly a century of Intellectual Property protection for a cartoon mouse settled a lawsuit. But it doesn’t lay out the obvious implication of the story it tells: that ABC was vulnerable to Trump’s attack not, primarily, because of its journalism — because of what Stephanopoulos said — but instead because the mouse company is not primarily interested in journalism.

 

'That is, it is precisely Disney’s size and scope that rendered it vulnerable to Trump’s threats. 

. . .

'For a corporation like Disney — or an oligarch like Jeff Bezos — it’s the other competing interests that may doom the journalism. And journalists need to be clear about that dynamic.'

 

SOURCE: Marcie Wheeler, Emptywheel

 

 

IT'S NOT THE UNIVERSITIES, IT'S THE CORPORATIONS

 

'Apart from this problem of potentially inconsistent measurement over time, the rush to attribute England’s supposed peculiar problem of overqualification to an oversupply of graduates is misplaced. Our re-examination of OECD’s survey data shows that, in England, graduates face lower risks of overqualification than non-graduates: the overqualification rate among non-graduates is 17 percentage points higher than among those with a degree. This gap between graduates and non-graduates broadly aligns with our own data from the British Skills and Employment Surveys.

 

'The Director for Education and Skills at the OECD, Andreas Schleicher, has been quoted saying that the UK’s higher education sector is “overextending” itself, with universities offering credentials that lack substantive value. However, with this oversimplified reaction, he is surely aiming at the wrong part of our education system.

 

'In addition, he is almost certainly targeting the wrong side of the labour market.

 

'Overqualification in the UK is likely driven, not so much by an oversupply of graduates as by a failure to create enough middle-skill jobs and robust vocational pathways outside universities.

 

'Overqualification is indeed a pressing issue. Even at a rate nearer 3 in 10, overqualification in England is higher than in most other advanced economies in the OECD. Overqualification depresses wages, diminishes job satisfaction, and undermines long-term productivity as underutilised skills atrophy. But this knee-jerk pinning of blame just on education, particularly on higher education, misses the mark, and forgets about the external benefits that education brings for society and the economy. Instead, England’s policymakers must address the structural deficiencies in the labour market, particularly the lack of opportunities for those with intermediate qualifications.

 

'Simplistic diagnoses risk distracting from the real challenges. England’s education system is not producing “too many” graduates. Instead, its economy and further education system fail to provide sufficient opportunities to harness the potential of those not bound for higher education.'

 

SOURCE: Golo Hesenke and Francis Green, Higher Education Policy Institute

 

COP29 FAILED BECAUSE THE FINANCIAL SECTOR CONTROLS THE PROCESS

 

'Tina Gerhardt: So in 2009 in Copenhagen, nations from the global north, which both historically and present day, these nations are disproportionately responsible for emissions, thus the climate crisis also, they agreed to pay $100 billion per year between the years of 2020 and 2025 to nations in the global south. Nations in the global south produce negligible amounts of emissions and yet they're on the front lines suffering the brunt of climate change impacts. Those range from drought in the Horn of Africa, which has been prolonged and ongoing last year, the year before, as well as the impacts of sea level rise on low-lying island nations around the world, to name just two examples.

 

'Payments in that amount of $100 billion per year between 2020 and 2025 never materialized. So as a result of that, at COP29, the first order of business was to renegotiate this amount, and crucially, really crucially, and I want to underscore this because I think this is going to be an issue to track going forward, how it was going to be paid. I'll come back to that in a second.”

 

'Second, in terms of the issues of finance, was loss and damage. These are two separate issues in terms of the finance issues. Loss and damage was agreed to two years ago at COP27 in Sharm el-Sheikh in Egypt.

 

'And with regard to loss and damage, last year, about a dozen countries agreed to pay $720 million. UN Secretary General Antonio Guterres, who's been really terrific in calling out hypocrisies on the issue of the climate crisis, called this amount woefully inadequate.

 

'Doug Henwood: That was million with an M?

 

'Gerhardt: Exactly. That's exactly what I was going to understand.

 

'Henwood: That's pocket change, really.

 

'Gerhardt: Exactly. Exactly. I couldn't agree more with you, Doug.

 

'So last year, no, two years ago, there were these floods that your listeners might recall that hit Pakistan, right? In 2022, third of the nation underwater, killing 3,000 people, half of whom are children. And to get back to the finance issue, at least 30 billion with a B in loss and damage.

 

'So that's one country and that's billion with a B. And the amount of all countries in the global north being offered is 720 million, as you put it, with an M. So, loss and that was a total wash at this year's climate conference.

...

'Every single year right now, nations have to do this kind of a stock taking of what they're doing to rein in emissions. They have to submit that to the UN. But crucially, there has never been a mechanism by which nations are held accountable to those things that they report or submit or that they are punished if they don't submit or they don't hold themselves to what their goals are.

 

'And that needs to change for this to have any kind of a realistic impact.'

 

...

'Another issue that I think is not going to go away is that the mechanism by which finance is generated from the global north to the global south needs to change. Specifically, that monies need to be delivered in the form of outright monies and not in the form of loans, because those further in debt countries in the global south. So there's a lot of discussion this year about how monies are supposed to flow from the global north to the global south.

 

'As I mentioned at the top, the $100 billion per year that was promised in 2009 at Copenhagen never materialized. At COP29 this year, wealthier nations promised $1.3 trillion in climate finance by 2035. But only 30 billion of the 1.3 trillion is going to come in direct monies.

 

'The rest of it is going to come through multilateral development banks, MDBs, entities like the World Bank, the European Investment Bank, the Inter-American Development Bank. The rest of the monies are going to come from the private sector, other new forms of finance. And this is a really big issue because of the interest and the further indebted that that might lead to.

 

And I think, you know, to view it cynically from the inverse vantage point, to me it looks like the World Bank and other entities are figuring out that the climate crisis is something that they can financially profit off of, which is totally disgusting and loathsome, but I think that that's out there.' 

 

...

'The climate crisis is obviously a global issue, but it's a global financial issue in that if nations from the global north do nothing to address it, it will eventually impact their bottom lines, right? There's a group in terms of finances during COP29, a group of economists chaired by Nicholas Stern, who's an economist, a banker, an academic at LSE, Amar Bhattacharya, who's at the Brookings Institute, and Vera Songwei at the World Bank, among others. They released this report that said that 30 billion offered directly is far too low and basically 1.3 trillion a year is needed.

 

'And if there's any kind of holding back, this amount is only going to increase with any kind of dithering. And I think that's important to take note of, too. This amount, 1.3 trillion a year, needed by 2030.'

 

SOURCE: Tina Gerhardt interviewed by Doug Henwood, Behind the News

 

NON-CELEBRITY AUTHORS SCREWED BY MAD INEQUALITIES IN THE PUBLISHING INDUSTRY

 

'I think I can sum up what I’ve learned [from the Penguin - Simon & Schuster anti-trust trial] is this: The Big Five publishing houses spend most of their money on book advances for big celebrities like Britney Spears and franchise authors like James Patterson and this is the bulk of their business. They also sell a lot of Bibles, repeat best sellers like Lord of the Rings, and children’s books like The Very Hungry Caterpillar. These two market categories (celebrity books and repeat bestsellers from the backlist) make up the entirety of the publishing industry and even fund their vanity project: publishing all the rest of the books we think about when we think about book publishing (which make no money at all and typically sell less than 1,000 copies).'

 

...

'In my essay “Writing books isn’t a good idea” I wrote that, in 2020, only 268 titles sold more than 100,000 copies, and 96 percent of books sold less than 1,000 copies. That’s still the vibe.'

 

Q. Do you know approximately how many authors there are across the industry with 500,000 units or more during this four-year period?

 

A. My understanding is that it was about 50.

 

Q. 50 authors across the publishing industry who during this four-year period sold more than 500,000 units in a single year?

 

A. Yes.

 

— Madeline Mcintosh, CEO, Penguin Random House US

 

'The DOJ’s lawyer collected data on 58,000 titles published in a year and discovered that 90 percent of them sold fewer than 2,000 copies and 50 percent sold less than a dozen copies.

 

'In my essay “No one will read your book,” I said that publishing houses work more like venture capitalists. They invest small sums in lots of books in hopes that one of them breaks out and becomes a unicorn, making enough money to fund all the rest.

 

'Turns out, they agree!'

 

...

We’re very hit driven. When a book is successful, it can be wildly successful. There are books that sell millions and millions of copies, and those are financial gushes for the publishers of that book, sometimes for years to come… A gusher is once in a decade or something. For instance, I don’t know if you know the Twilight series of books? Hachette published the Twilight series of books, and those made hundreds of millions of dollars over the course of time.

 

Right now the novels of Colleen Hoover are topping the bestseller lists in really, really huge numbers and the publishers of those books are making a lot of money. You probably remember The Girl With the Dragon Tattoo… Or the Fifty Shades of Grey series. So once every five years, ten years, those come along for the whole industry and become the industry driver that’s drawing people into bookstores because there is such a commotion about them. 

 

— Michael Pietsch, CEO, Hachette

 

...

 

Top-selling authors were defined as those receiving advances (i.e., guaranteed money) in excess of $250,000. Far fewer than 1 percent of authors receive advances over that mark; Publishers Marketplace, which tracks these things, recorded 233 such deals in all of 2022.

 

— ken whyte, Publisher at Sutherland House

 

***

Markus Dohle, CEO, Penguin Random House, says the top 4 percent of titles drive 60 percent of the profitability. That goes for the rest of them too:

 

It would be just a couple of books in every hundred are driving that degree of profit… twoish books account for the lion’s share of profitability.

 

— Madeline Mcintosh, CEO, Penguin Random House US

 

Around half the books we publish make a profit of some kind.

 

— Michael Pietsch, CEO, Hachette

 

About half of the books we publish make money, and a much lower percentage of them earn back the advance we pay.

 

— Jonathan Karp, CEO, Simon & Schuster

 

'According to Hill, 85 percent of the books with advances of $250,000 and up never earn out their advance. (Meaning the royalties earned never covered the cost of the advance.) Many publishers have realized that maybe those big advances aren’t worth it.'

 

. . .

'Wouldn’t it be great if you could pay $9.99 a month and read all of the books you want? Just like you get all the movies you want from Netflix? Or all the music you want from Spotify?

 

'Technically, it does exist. Kindle Unlimited is the largest, followed by Scribd. Audible isn’t quite all-access, but then Spotify got into audiobooks and made them so. But none of these players have quite taken off the way Netflix or Spotify has. That’s for one reason: The Big Five publishing houses refuse to let their authors participate. 

 

Q. No books are found on Kindle Unlimited? Because you think that’ll be had for the industry?”

 

A. We think it’s going to destroy the publishing industry.

 

— Markus Dohle, CEO, Penguin Publishing House

 

'He’s right. No one would purchase a book again.

 

We all know about Netflix, we all know about Spotify and other media categories, and we also know what it has done to some industries… The music industry has lost, in the digital transformation, approximately 50 percent of its overall revenue pool.

 

— Markus Dohle, CEO, Penguin Publishing House

 

'There’s one reason.

 

Around 20 to 25 percent of the readers, the heavy readers, account for 80 percent of the revenue pool of the industry of what consumers spend on books. It’s the really dedicated readers. If they got all-access, the revenue pool of the industry is going to be very small. Physical retail will be gone—see music—within two to three years. And we will be dependent on a few Silicon Valley or Swedish internet companies that will actually provide all-access.

 

— Markus Dohle, CEO, Penguin Publishing House

 

'The publishing industry would die, that’s for sure. But I’d be willing to bet writers would get their books read way more.

 

'And I think it’s on its way. Spotify has already started publishing audiobooks, and my money is on Substack for eventually publishing written books!'

 

SOURCE: Elle Griffin, The Elysian

 

 

 

 

 

 

The Strike continues with no end in sight.  Although there have been tentative agreements concerning Post-Docs and Academic Researchers, in the Academic Student Employee and Student Researcher units, the parties appear to remain well apart on the fundamental economic issues.  This distance is most easily seen in the ASE category: although the UAW made significant adjustments in its proposal UC responded with little change.  You can see the latest UAW wage proposal here and the latest UC wage proposal here.  

It is impossible from the outside to tell where the negotiations are headed.  But what I want to try to do here is offer some suggestions for how we could think about the gap, how we got here, and what we might do in the future to alter the conditions that have created what is undoubtedly a crisis at the University, and a depressing foreshadowing of the end of UC as a serious research university.  If the latter does happen the responsibility will ultimately lie with UCOP and the Regents with some support from the campus Chancellors.

The first point is that it seems clear that there is a fundamental gap in the way that each side is defining these negotiations.  UC is approaching this as if it were a conventional labor negotiation with a class of workers whose position is fundamentally stable.  The UAW and its supporters on the other hand, start from the position that they have been placed in an untenable economic position.  Given the fact that TA wages have barely kept up with national inflation over the years combined with the extreme cost of housing in California, they cannot continue with relatively minor adjustments in the dollar amount of their monthly pay.  To make matters worse, UC's latest offer has a first year adjustment that is about equal to current inflation.  In this light, UCOP appears completely out of touch with the reality of life on campuses and indifferent to its lack of knowledge.

This image of autocratic disregard was only deepened by Provost Brown's appalling letter to the faculty last week.  Although much of it was standard UCOP pablum, he inspired widespread faculty hostility with his closing flourish threatening faculty members who refused to pick up the work of striking workers with discipline beyond the docking of pay.  For the last three years, faculty and lecturers  have performed an enormous amount of additional labor to keep the university afloat during the pandemic: transforming their courses, spending additional time with students, planning for campus transformations, and putting their research duties on the side to maintain "instructional continuity" as the administration likes to put it.  After all this effort, for the Provost to threaten disciplinary action for those who choose not to pick up the work of striking TAs or to act upon their own convictions about academic integrity, manifests a contempt for the faculty that is hard to ignore.

It's important to grasp UC's budgetary situation correctly.  Most importantly, the usual invocation of the university's 46 billion dollar budget needs to be put aside.  Most of that budget is tied up in the medical centers or in funding for designated purposes.  The real budget that is relevant is the core budget made up of tuition, state funding, and some UC funds.  It comes in closer to $10 billion (Display 1) and is largely tied up in salaries across the campuses.  As Chris and I have been pointing out for nearly 15 years, UC has been subject to core educational austerity surrounded by compartmentalized privatized wealth (although we should notice that the medical centers barely stay in the black).  This crisis will not be overcome by hidden caches of money floating around the university.  The problem is deeper than that:  its roots lie in the combination of state underfunding and the expansion of expensive non-instructional (often non-academic research) activities that have taken up too much of campus's payrolls.

But I want to stress that this reality does not mean that the graduate students are being unreasonable in seeking wages that enable them to perform their employment duties and pursue their studies.  Instead, it is a sign of how deep the failure of the University has been in (not) providing a sustainable funding model both for students and faculty supporting students.  The Academic Senate has been pointing to this problem for at least two decades.  In statements and reports from 2006, 2012, and 2020, the Senate has repeatedly insisted that graduate student support was insufficient and proposed steps to improve it.  Even the administration itself has sometimes recognized its depth.  To take only one example from 2019, UCOP's Academic Planning Council declared that:  

UC must do better at financially supporting its doctoral students, particularly as it seeks to diversify the graduate student body. The University cannot compete with its peers for talented candidates if it does not offer competitive support. In 2017 the gap in average net stipend between UC and its peers was nominally $680.3 In actuality the gap is much greater due to California’s high cost of living - with factored in, the average gap in doctoral support is closer to $3,400.4 This is a huge difference but not insurmountable. The Workgroup urges UC leadership to make every effort to close the gap so that the quality of UC’s doctoral programs is maintained and enhanced.

UC campuses, with planning and prioritization, could guarantee five-year multi-year funding to doctoral students upon admission. According to current data, about 77 percent of doctoral students across UC receive stable or increasing net stipends for five consecutive years.5 (Appendix 1.) With some exceptions, this multi-year funding is relatively consistent across campuses and disciplines. However, this funding is typically not presented as a full five-year multi-year guaranteed package upon admission. Offering five-year funding upon admission would enhance recruitment of high-potential students, offer financial security, and address one of the chief stressors for doctoral students - worry over continued funding while in the program.

In addition to offering guaranteed five-year funding, the University must address the issue of graduate student housing. Graduate students, many of whom have family responsibilities, face enormous challenges in finding affordable housing. Without a targeted effort to address graduate student housing, UC’s capacity to attract and retain qualified candidates is at serious risk.  (4-5)

And yet the problem persists.  The Academic Senate has stressed this issue repeatedly and with great force.  A recent letter from the UCLA Divisional Senate's Executive Board has pointed its finger at the problem--the need for renewed state funding.   It is time for the administration to do something to fix it--and something that doesn't simply damage other parts of the academic endeavor.

UCOP will continue--as they always do--to insist that we cannot get more money out of the state to pay for what needs to be done.  But let's press on that point a little more.  It is certainly possible that we are heading for a recession--the Federal Reserve seems determined to induce one to put labor in its place.  But does that mean that the state doesn't have the capacity to respond to an emergency at the University?  Despite all the talk about a budget shortfall, Dan Mitchell at the UCLA Faculty Association Blog has been pointing out that the situation is far less clear than the Legislative Analyst is insisting (and the University is repeating).  For one thing, revenues have been higher than expected and that even with the possibility of a downturn the state has around 90 billion dollars in usable reserves. If the state won't help it's not because of economic necessity but a matter of political choice.  After all, the Governor had no problem finding $500 million to pay for a private immunology research park at UCLA that provides little, if any, real benefit to the campus academic program.  The Governor and the state can do more for the educational core of the University than they are doing: and if UCOP and the Regents can't show the state how necessary that is, then one wonders again what their purpose is.  

I want to make one final point.  UC is the research university of the state and UC insists that graduate education is at the heart of its purpose.  But if UCOP actually agrees with that then the question must be: what do we need to do to have academic graduate education in a sustainable form?  What resources do we need to enable students to both contribute to the larger functioning of the university and to pursue their studies?  Are we willing to have only graduate programs where students have family money or have already flipped a startup?  Or where they are here to gain an additional credential to take back to their jobs?  Does UCOP remain committed to UC's contributions to disciplines across the spectrum of knowledge?  Or does it only care about graduate students (and others) as cheap and disposable labor?  

I don't expect that these negotiations or this strike can answer or settle these questions.  But UC is at a crossroads and the university--especially its leadership--must face up to that.  The long-term question raised by the strike is whether UC will continue as a research university; if we don’t make it possible for future scholars to attend, we will have forfeited our purpose.  There is an opportunity here to take the first steps towards creating a new sustainable vision of a twenty-first century research university.  Or we can continue as we have in decline.  The choice ultimately is UCOP's and the Regents'.

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(I've focused here on the ASE unit because the Student Researcher Unit is admittedly a more complicated problem.  The vast majority of GSRs are supported by external grants and those grants have both limits and their own rules.  To some extent UC has been negotiating with someone else's money.  That doesn't mean the situation is impossible but rather that it has to be implemented in such a fashion as to protect Principal Investigators from damaging unintended consequences.)

Two years of context helps to understand the state Democrats' plan for UC, expressed in the Governor's budget proposal this month.

 In November 2019, UCOP sought to end UC's worst modern budget decade with a some meaningful funding growth. The 2010s had brought many negative net revenue effects:

• state funding cuts and subpar annual general fund increments
  

tuition freeze (welding shut UC's revenue safety value)

restart of pension contributions with no permanent state support for employer share

end of state funding for new construction

no state funding for deferred maintenance (backlog estimates ranging from $6.2B to $14B)

Campuses had diligently followed instructions to seek multiple revenue streams.  The two most familiar are non-resident tuition and for-profit degree programs (SSDPs).  

A third revenue stream has been institutional debt. It stands at $26.7 B (page 16), up 85 percent from $14.4 B in 2011 (page 15). (UC debt is also up year-on-year by around $2B from 2019, mostly in the form of new Medical Center Pooled Revenue Bonds. This does not include an additional $2.8 B in Covid-related borrowing in summer 2020, with more to come.)

Even before Covid-19 appeared, three UC flagship campuses were projecting deficits in the first half of hte 2020s. See "Destined for Deficits" for flagship details; see "The Essential Charts" for the twenty-year system pattern. Funding crises have long been visible on the campuses: UC Berkeley's VP for Finance and Administration called the funding model unsustainable in 2013.

Such news doesn't usually make it into presentations to the regents, so in this context UCOP's November 2019 budget document was unusually graphic.  It identified many areas of functional deterioration at UC. These included sharp increases in the number of students per ladder-faculty member, the same for student:staff ratios, and faculty salaries that had spent at least 20 years at around 10 percent below comparators. 

The document identified a chronic problem with state funding that usually escapes notice: net new funding is generally a fraction of the headline state increase, because it must cover terminated previous one-time funding or new mandated activities. 2018-19's headline increase of 7.1 percent yielded 0.7 percent as a "net available for sustaining core operations"--a fraction of that year's 3.5 percent inflation rate (Display 7). 

UCOP established this 2019 narrative of UC damage to justify that year's proposal for a modest "cohort-based" tuition plan, which would allow tuition increases at about inflation, fully in place after 4 years. It was a toddler-sized foot in the door, but it was a foot. The overall plan would have brought UC's state general fund allocation to just about $4 billion.

The result: Newsom cut the Regents' request for $447M for 2020-21 down to an increase of $217M. Then there was Covid, and the state cut UC $300.8 M instead.  The Department of Finance puts UC's general fund allocation for the current year at $3.465 B.

In November 2020, the regents adopted a UCOP request for an additional $518.2 M for 2021-22.  Once again, UC would be inching towards the magical $4 B level.  $300.8M of this was trying to fill in the 2020-21 cut--to keep that reduction from forming a permanently reduced baseline. There was $157.6 M for mandatory cost increases--salaries, benefits, and debt service--and about $60 M for improving student outcomes in ways mandated by the legislature.  

This month, Newsom came back with a proposal for $136.0 M. He will not backfill the permanent cut of  $300.8 M, even on a one-time Covid-19 emergency basis.  UC keeps that hole and is to receive 86 percent of what it had defined as mandatory cost increases (negotiated wage increases and benefits, among other things).  That was one of five General Fund items the regents voted in November to request. They got none of the other four, though Newsom did recommend $225M in one-time funds for deferred maintenance and some other items.  The governor's proposal would put UC's general fund at $3.6 B. That's about the level of 2017-18. It's also about the level of 2007-08, unadjusted for inflation.

 In a regents' committee meeting on January 20th, UCOP officials summarized the governor's budget in a few slides. 

 The 3 percent base increase is on the new, permanently-reduced amount. The rest are line-items that normally a public university would fund out of general operating money. UC PRIME is an example-- a diversity-oriented medical education program for underserved areas that UC Health should just pay for out of operations. Same for legal services for undocumented students, which should be funded as one among many permanent student services.  

Next slide: DM gets $175 M in one-time funds, and more earmarks are added. The DM figure is about 1.25 percent of a reasonable estimate of system-wide deferred maintenance, so at this rate UC will fix this year's back log about 80 years from now.   Except it's not annual money . . .

 The final slide notes the continuation of the tuition freeze and an accelerated deadline for closing equity gaps in student attainment.

These are all long-established goals, particularly turning UC into a workforce training system, which hails from the 1980s and 1990s, and which was re-emphasized by Newsom in his first budget. Such goals are also priced in to allocations, so new efforts at pursuit will never receive a reward. 

In short, Newsom restores Jerry Brown austerity in the form of frozen tuition and sub-inflation net state funding. We all hate the phrase, but this is classic "do more with less"--with no state interest in its effect on UC viability.

This budget presentation to the regents was more negative than UCOP's previous messaging about the governor's proposal. After Newsom's release, the UC president immediately thanked him for, in effect, providing one quarter of his request. This signaled to the media that the governor was being very supportive of higher education and that his proposal was good news. Poor Teresa Watanabe, the LA Times's UC & higher reporter, with her colleague Nina Agrawal, had to try to write a coherent story. They cited all three system heads calling the budget a "welcome reinvestment," to quote CSU's chancellor Joseph Castro, while noting that Newsom did not use the unexceptedly good state revenue picture to undo the current year cuts or to come close to matching the requests. The only figure in the story who suggested damage to educational quality was a (former) chancellor,  George Blumenthal, with direct experience of a campus.  

Taking the LAT coverage and the UCOP budget presentation together, we have these budget stories.

• It's under control. Wait until next year (UCOP budget officials)
• Funding is very complex. UC is the greatest public university (UC president)
• The governor is reinvesting in higher education (heads of UC, CSU, & CCC)
• California Democrats are degrading the quality of UC (and CSU & CCC) through underfunding (the occasional chancellor plus random bloggers)
  

One of these tales is not like the others. It is far less pleasant to consider. It is also true. But in the absence of budget context, budget history, and budget needs--absences actively generated by the first three stories--the fourth can't establish a claim on reality.  The situation keeps the quality narrative obscure. If it does, the gap between means and funds will continue to grow.

Figure 1: State General Fund Allocations to the University of California Compared to State Per-Capita Income Growth, 2001-2022, with Regents Budget Request 2020-22.

The gap is learning and research (and eating and rent-paying) that doesn't happen.

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Data from California Department of Finance (UC general fund allocations) and from the Legislative Analyst's Office data and forecasts for state personal income growth.  Charts with tuition revenue and other details are presented and discussed here.   Photo Credit