Bob Samuels nicely argues at Inside Higher Ed that the university administration’s approach to its funding structure is to blame the state for withholding resources while refusing to use its profitable aspects to subsidize the parts of the university that merely provide a public good, despite the fact that those “businesses” are very basically dependent and subsidized by public resources in the first place. An excerpt:
“When reporters asked Yudof how he could lend the state money at the same time he was cutting salaries, reducing enrollment, and laying off non-tenured faculty, he responded that when the university lends money to the state, it turns a profit, but when the university spends money on teachers’ salaries, the money just disappears. According to this logic, the university should just get out of the education business and concentrate on generating high bond ratings.”
Which is as good a time as any to re-visit this great piece, which rips apart the myth that the UC’s private functions cannot be used to subsidize its public functions (a particularly pernicious myth, after all, because its public functions subsidize its private functions in all sorts of ways). In an open letter to Yudof, Charles Schwartz writes:
You say “A payment for a surgery in a UC hospital can’t be redirected to fund graduate students.”
That is a half-truth. In fact there is a surplus income from the UC medical enterprises, amounting to around $1 billion a year, which is distributed to faculty in the Medical Schools as “bonus pay”, on top of their regular academic salaries. A portion of that money could be redirected to other pressing academic needs in these times of budget stringency: that would be called shared sacrifice. You and The Regents have authority to implement such a strategy.
The regents, however, operate under the assumption that money which the university’s “businesses” earn while benefiting from your tax dollars is to be theirs alone. And classes, the public function of the state’s university system function are to be thought of simply as a commodity to be sold to its consumers.