Strapped UC Schools Seek More Autonomy

The very first thing I learned about the desire of the business and law schools at the University of California to wriggle out from under the dead hands of UC headquarters and the state Legislature is this:

None dare call it “privatization.”

The term “confuses more than illuminates,” Christopher Edley, the dean of Berkeley’s law school, Boalt Hall, wrote in an op-ed in these pages last year.

The issue, unsurprisingly, is money. Public university administrators all over the country are getting fed up with declining support from their state and local governments, which measured as dollars per enrolled student hit a 25-year-low in 2005, according to the Chronicle of Higher Education.

“I don’t think any public institution can fund to fullest extent what it takes to be one of greatest business schools in the world,” Judy Olian, dean of UCLA’s Anderson School of Management, told me this week.

Along with Boalt, Berkeley’s Haas School of Business and UCLA’s School of Law, Anderson has been waging a very delicate campaign to win more autonomy from the UC Regents in setting its tuition and faculty pay scales. The issue is delicate because the schools’ relationship with the UC system is intimately bound with their public mission, which includes educating the most qualified Californians regardless of their financial resources. There’s also some concern that, as the law and business schools go, so will the UC system. Eventually that leads to the question: What does it mean to have a state university?

The impulse toward self-sufficiency is a rational response to an off-campus phenomenon -- the decline in the state’s budgetary support of UC has been picking up steam. Things have reached the point where administrators and faculty have lost all confidence in the state government as a reliable funding partner.

The record suggests that traditional levels of state support of 60%-80% are relics of the distant past, given competing demands on budget dollars and the Legislature’s refusal to raise taxes to meet them. At Anderson and Haas, the state’s share of the budget is now only 20%. At UCLA law school it has fallen to 38% from 59% in just the last two years.

The law and business schools at UCLA and Berkeley feel the crunch because they compete with wealthy private institutions for the most-qualified students and most-heavily recruited professors. The system’s other law and business schools also are strapped, but don’t compete in the same market; the system’s medical schools have access to other outside resources, including clinical fees and research grants and contracts.

There aren’t many ways to take up the slack. One option is to solicit more private donations, a course that all the institutions have embraced -- Boalt this year launched a $125-million fund-raising campaign, for example -- and raising tuition and fees. Increasing tuition and fees for Anderson’s 660 full-time MBA students by say, $7,000 a year, would bring the rate for out-of-state students about even with the average market rate of $40,000. And it would leave a sizable discount for California residents, while yielding $4.6 million for the school -- a healthy chunk of its $60-million budget.

But the UC Regents have always been uneasy with the idea that the professional schools should charge market rates and spend the additional income on faculty salaries and student fellowships. The board acknowledged the principle in 1994 when it established a so-called professional degree fee differential as a mechanism for the schools of law, business, medicine, dentistry, and veterinary medicine to reach parity with their private competitors -- with the understanding that California residents would still get a discount.

Still, the regents retained the authority to set the differential every year, and they’ve never exploited it to the max. Although tuition at all four schools has roughly doubled in the last few years, it still greatly lags the market and the regents haven’t set a timeline for catching up.

Things are almost as bad on the spending side: Olian says Anderson must get formal approval from UC headquarters to pay any professor more than $189,000, and other deans complain that bureaucratic obstacles to various forms of noncash compensation abound.

One important question is whether increased autonomy for the law and business schools presages an entirely new relationship between UC and the state government. Supporters of this notion point to the University of Michigan, which responded to draconian state budget cuts in the 1970s and 1980s by remaking itself as a private university in all but name. The university retained a commitment to educating qualified state residents through a substantial in-state discount. But it embarked on a program of aggressive private fund-raising and recruitment of out-of-state students willing to pay full fare. The state now contributes less than 10% of the university’s budget.

“That’s the broad outline of where UC has to go,” argues Daniel J.B. Mitchell, a professor of management at Anderson. He argues that granting autonomy to the law and business schools is only a starting point. “It’s more politically acceptable to ask why the California taxpayer should be subsidizing MBA education. But at the end of the day, the system [in Sacramento] is dysfunctional and we should get the university as much disengaged from that as we can.”

And what of the system’s public mission? The four schools all say that even with more freedom to increase tuition they’ll devote large portions of their resources to financial aid and to serving the community. “We are committed to training the leaders of the state in the government and nonprofit sectors,” says UCLA Law Dean Michael Schill; the school understands that students leaving law school with crushing tuition debt can’t afford to launch careers in public service.

But the administrators argue that they can better serve their public missions if they’re free to raise money where they can and deploy it themselves. If they get their way, they’ll be embarking on a great experiment. Will the rest of UC follow?

Golden State appears every Monday and Thursday. You can reach Michael Hiltzik at golden.state@latimes.com and view his weblog at latimes.com/goldenstateblog.