PERSPECTIVE ON EDUCATION : Rebuild Master Plan--for Students : California’s problems will worsen without fundamental changes, including an end to subsidies for the rich.

The economic, social and political realities of California in the 1990s cannot sustain the policies and practices that came to be considered normal under the landmark 1960 Master Plan for Higher Education.

The difficulties we face in higher education are much more fundamental than the temporary adversities caused by a severe economic slump. Indeed, the distress in the academic world in many ways is analogous to the deep-seated forces now causing a painful restructuring in some of America’s largest and historically most successful corporations.

I believe that the disarray now unfolding in higher education will continue and worsen unless we have the courage to get on with the extensive reforms that the new realities require.

The restructuring that we need requires a new framework for public policy on higher education--and it involves a very different set of priorities. The current practice in California is to fund segments, institutions and operations first. The funding of students, especially financial aid based on need, is a much lower priority.

The fundamental change that I propose--and it sets the tone for numerous other changes--is to fund students first. Put their interests first, and set need-based student financial aid as the top priority in the state’s higher-education budget. All the other legitimate and worthy needs of higher education would have to be financed from remaining funds.

Funding students first amounts to a paradigm shift, requiring a fundamentally different approach to all elements of higher-education policy in California. The basic concerns of the Master Plan--access to public undergraduate and graduate education; allocation of programs to the segments and campuses; research and service provided by the professoriate; the role of the independent sector, and how higher education is financed--all need to be reconsidered in light of this new first principle.

If we take a fresh approach, it may still be possible to achieve the worthiest aim of the Master Plan, to ensure that all qualified students have access to higher education. But this assurance will be possible only if we operate very differently and manage much more efficiently.

Here are some of the key principles:

* The burden of financing higher education must be progressive, not regressive. The Master Plan specifies that no tuition be charged at public universities, meaning that even students from families of the rich and near-rich currently enjoy generous state subsidies to attend public universities, despite their ability to pay. By contrast, student-aid programs based on financial need are woefully underfunded. It is a very regressive system and it needs to be turned upside down. In the public sector, the University of California and the California State University system should be given the freedom already enjoyed by community colleges to levy tuition charges in order to offset part of their costs of instruction. And tuition charges should be levied on the principle of the ability to pay--those who can afford to pay the full charge should do so.

* A safety net must be in place so that needy students will not see tuition charges as a barrier to college, and it should be the state’s responsibility to ensure this equity of access. Funding students first means that grants to eligible students (through whatever state mechanism can best ensure equitable distribution of student aid) should be the first item funded in the higher-education budget. It also means that increases in tuition must be matched with student aid increases on a dollar-for-dollar basis, not on a percentage basis. If there was an aid deficit last year, no tuition increase could be approved for next year unless the gap were closed.

* It is important that tuition rates not be linked to the costs of instruction, because such a practice provides no incentive to keep these costs as low as possible. It would be better to relate tuition rates to an external factor, such as median family income in California. For example, tuition at community colleges, CSU and UC could be linked at progressively higher rates, respectively, to a percentage of the previous year’s median family income. Grants to eligible students attending private colleges could be tied by formula to the state subsidy for students attending public universities.

* Funding students first means giving priority to undergraduate education, in terms of financing the state subsidy and grants to students. It also means different funding levels for the state’s subsidy of undergraduate and graduate education--a means to ensure that access to undergraduate education is not in competition with postgraduate study, and that the higher costs of graduate education will not be borne by undergraduate students.

* New incentives must be created both for students and institutions to accomplish more with available resources. Unless the academy can become more productive, it is highly unlikely that there will be adequate funding of students. For example, the norm for full-time students to complete a baccalaureate degree should be four years, not the five to seven it has now become. Indeed, the best-prepared students should be encouraged to graduate in three years.

Funding policy should create incentives both for institutions and full-time students to meet the four-year norm. For example, qualified students who have financial need could be eligible for the equivalent of four years of state subsidy at a public university, minus tuition. If they take six years to reach the degree, the four-year pool of dollars would be worth considerably less. On the other hand, if they take two years at a lower-cost community college, they would have extra money to apply against a longer stay than two years at a public university, or to transfer to a private college.

If we take seriously the need to restructure some basic features of the state’s higher-education system and get on with the obligation to fund students first, other reforms and innovations will very likely have to be considered as well. In any case, it is clear that business as usual in the academy will no longer suffice. The times have changed, and we cannot go back.