The Daily Cal reports:

The California State Treasurer’s Office sold $860 million worth of University of California 100-year bonds, which will be used to fund capital projects at the university, to 70 large investors Tuesday.

The money raised from the sale of the bonds — which mature over the course of a century and pay about 4.9 percent semiannual interest rates in May and November — will be used for long-term UC capital projects approved by the UC Board of Regents, according to UC spokesperson Dianne Klein. The bonds will also fund individual capital projects at UC Berkeley, UC San Diego and UCLA, including a portion of the repair of Memorial Stadium, according to Klein.

(...)

UC bond sales are part of standard operating procedure and take place a handful of times each year, but this sale was unprecedented because of its 100-year maturation period combined with the large value of the sale, according to Tom Dresslar, director of communications at the treasury.

The 100-year bonds were designed to appeal to institutional investors, including insurance companies, hedge funds, banks and pension funds, whose interests span multiple generations, according to Klein.

The university is the real world. One positive effect of these bond sales is that they reveal -- if there were still any doubt -- the many and intimate ways in which the UC is tied to the world of Wall Street finance. These ties are the result of a series of conscious decisions made by UC administrators and the Regents to transform the university into a profit-oriented, revenue-generating institution. State funding has decreased, but the shift toward this privatized model, in which the university increasingly generates unrestricted revenues through student tuition hikes (themselves backed by student loans) on one hand and the exploitation of workers on the other, is not, or not only the result -- it is also a cause.

The Daily Cal article unexpectedly pulls a Meister and does a good job of outlining the economics of UC bonds by going back to a 2009 sale of $1.05 billion in construction bonds:

In August 2009, the UC announced that proceeds from approximately $1.05 billion in federal stimulus “Build America Bonds” sold to the public would help fund about 70 capital projects on all ten UC campuses.

In a press release following the 2009 bond sale, Moody’s, a ratings agency, explained the appeal of UC bonds in a shaky economy, since the university has the ability to raise its revenue by increasing student tuition despite state budget cuts.

“In-state tuition has increased dramatically,” the press release stated. “And the out-of-state market remains a comparatively untapped resource that could provide additional growth in tuition revenue should State funding be cut further.”

But they don't look as carefully at the bond report for the current sale, rated AA+ by Fitch. The first thing that becomes apparent is just how happy the bond raters are with the UC's financial managers:

WEAKENED STATE FUNDING: Recent reductions in state appropriations, and the potential for additional cuts through the intermediate term, are mitigated by UC's limited reliance on state operating support. Timely measures consistently taken by UC's 26-member regents and highly experienced management team during times of state fiscal stress provides further rating stability.

As Bob Samuels has been arguing for years, the UC gets its "marching orders" from the bond raters. Fitch is down with the UC's "highly experienced management team" because they've done exactly what Fitch wanted them to do. As students and workers at the UC, however, we aren't so happy with their tenure because we viscerally understand that we're the ones getting screwed. The university is being run for them, not for us.

The other thing that's useful about these bond reports is their honesty. They tell us what the UC administration is really thinking about doing, without funneling it first through an (admittedly flawed) public relations machine. Again, Fitch is happy with the UC's plans for dealing with the likelihood of future budget cuts from the state. In fact, Fitch thinks these budget cuts are a good thing because they increase the university's "operating autonomy." What this means essentially is less restrictions on what the UC can do with its revenue -- while state funds are restricted, meant to cover the university's instructional costs, private funds are not, and can be used for anything from capital projects to paying debt service on previous construction bonds. Fitch tells it like it is:

Appropriations declined a total of $750 million to about $2.27 billion for fiscal 2012, including a mid-year $100 million cut resulting from the state's ongoing revenue shortfall. UC took numerous steps over the past few years to offset the loss in state funds, including significant student fee increases, staff reductions and other cost savings initiatives. On a combined basis, these measures have enabled UC to close about 26% of the total fiscal 2012 budget gap (approximately $1.1 billion).

While the governor's fiscal 2013 budget proposal, currently under review by the state legislature, recommends no further cuts to UC, Fitch believes that state funding for higher education will face continued pressure going forward. The budget proposal is dependent upon various revenue generating ballot measures subject to voter approval. Should these measures fail to gain approval in November, the proposal calls for a $200 million appropriation cut to UC effective Jan. 1, 2013.

The university's management team continues to explore various options to offset reduced state aid, including working with the state on a potential multi-year funding agreement which would provide UC longer term stability in state support in exchange for increased operating autonomy. Options being considered under this agreement include specified general fund increases through fiscal 2016; an increase in the state's share of employee retirement plan contributions, both subject to voter approval of the above-mentioned ballot measures; and more regular, less dramatic increases in tuition.

UC continues to benefit from one of the most diverse revenue streams in higher education, and Fitch notes positively its low and declining reliance on state aid as a revenue source (12.1% in fiscal 2011). The university's other significant funding sources include revenue derived from the operation of its five medical centers (27.1%), grants and contracts generated by its substantial sponsored research activities (24.5%), and student-generated revenues, including tuition, fees, and auxiliary receipts (16.6%).

Straight from Wall Street to the UC: another round of construction bonds, another set of marching orders.

[Update 1/20 9:02 am: Check out Zunguzungu's reportback from the library occupation.]

Via Occupy Cal:

We love our libraries and are here to protect them. Libraries are critically important for excellent education for all. We students, faculty, and community members collectively have decided to occupy the Anthropology Library at UC Berkeley to protest the dismantling of the library system on campus and public education as a whole.

We chose to occupy this space because the Anthropology library is a recent victim of extreme service cuts. The hours of operation are being cut from the previous, already slim, 9am-6pm to the current 12pm-5pm, because the university has not taken the necessary steps to sufficiently staff the library. The multiple attacks on campus libraries are a reflection of privatization and the devaluation of the public education system.

We are here to reverse this process. We call on the administration to take immediate action to hire another full-time librarian to ensure full access to this valuable resource.

The administration may claim that there are insufficient funds, but in reality these resources exist, but their allocation by UC administrators and the state does not adequately reflect the values of excellent public education. Why have the UC Regents continued to approve 21% increases in administration salaries, while students are being denied access to their libraries? Why are the taxes of the 1% so low while essential social services are being cut across the state and country?

We stand in solidarity with the Occupy movement as a whole and the protestors at UC Riverside who were met with violence in their attempt to protest the austerity policies of the UC Regents, Sacramento, and Washington D.C.

Defend our libraries and schools. Occupy together.

--- The Anthropology Library Occupation
January 19, 2012

Check out the Teach the Budget Blog for more information, flyers, and an action kit.

Teach_the_Budget_Winter 2012 has arrived!

Use it to teach your students, your friends–or yourself–about the budget crisis at the UC, and how it connects to state and national political and economic issues.

It's official -- the administration continues to grow as faculty and workers continue to shrink. In this context, it's worth noting once again that administrators are the only ones getting substantial raises these days (the Daily Cal has the enemies list). We have to remember that austerity doesn't only mean cutbacks and layoffs -- it also corresponds to hirings and bonuses.

Here's the full report from Keep California's Promise:

In November of 2009, KeepCaliforniasPromise.org posted a report by Richard Evans titled “Soon every faculty member will have a personal senior manager” which pointed out that the number of managers at UC was growing far faster than the ranks of the faculty and that, if the trend continued, it would not be long before there were more senior managers than ladder rank faculty. Richard just sent me an e-mail pointing out that data through April of 2011 was out.

I wondered if the data would show how the “Working Smarter Initiative” and much talked about cuts of $80 million to the UC Office of the President, had combined with promises to first and foremost “preserve excellence in instruction, research and public service… which it cannot do without continuing to attract and retain top-flight faculty” (see, http://www.universityofcalifornia.edu/news/article/25580) to reverse that trend.

Well, it turns out faculty ranks have declined by 2.3 percent since the 2009 post, at a time when student enrollment increased by 3.6 percent. (I would hope the UC administration wouldn’t try to spin a continuing erosion of a major measure of academic quality such as the student faculty ratio as increased efficiency.)

But we all know the budget cuts have been tough. Even an administration striving to preserve the education and research missions of the University by directing as many of the cuts as possible at administrative overhead might have to make painful cuts to the employees responsible for education and research in such an environment. The cuts to senior administrators must be even steeper, right? At least as steep?

Somehow the ranks of managers have continued to grow right through this difficult period – up 4.2% between April, 2009 and April, 2011. In fact, the dismal prediction of our 2009 post has now come to pass: UC now has more senior managers (8,822 FTE) than ladder rank faculty (8,669 FTE).

... but that obviously doesn't mean it's not going to happen anyway. The regents didn't want to be forced to discuss, or even voice support for, the proposal to lock the UC into raising fees by 81 percent over the next four years. But it's not because all of a sudden they had a change of heart.

It's because they're terrified. Of us.

The Chronicle today does a great job of revealing what the UC regents really think about public education -- that it should die:

Yudof and his finance team had hoped the regents would discuss their multiyear budget and tuition proposal, then vote in November.

But even though the regents liked the idea of imposing some stability on their wildly fluctuating budget, they stayed away from the hot-button issue of yearly tuition increases.

"It scares the bejesus out of folks," was how Lt. Gov. Gavin Newsom, a regent, summed it up.

The four-year budget plan was intended to tackle a looming gap of $1.5 billion over the next four years, about a third of which UC says is needed for higher pay, and a quarter for retiree health and pension benefits. This year's tuition increase and cutbacks have resolved an additional $1 billion shortfall, officials said.

The idea was that a steady flow of tuition hikes would help pay these costs. Tuition would rise more in years when the state gave less, and vice versa. In the worst-case scenario - if the state provided no increase - basic tuition would rise by 16 percent a year, reaching $22,200 by fall 2015, not including mandatory campus fees, room and board. That's 81 percent higher than the current $12,192.

[...]

Negotiating with Sacramento is "a waste of our time," said Regent Dick Blum.

Instead, the regents should approach people "who actually can write a check," he said. "Chevron, Apple, Cisco and Google - all these companies sitting on money they don't know what to do with."

Regent David Crane picked up on the theme, urging colleagues to "start acting like you're a private university. Get real - and don't fool yourselves and think the Legislature will turn around, or you'll be waiting for Godot," he said, referring to the Samuel Beckett play in which the protagonists wait in vain.

Some regents said corporate money could be used for scholarships. Others said an ad campaign for UC would be better.

Chairwoman Sherry Lansing suggested they form subcommittees to tackle each approach. The bottom line, she said, is, "I don't want to bring this (proposal) forward in November."

[...]

The regents, who have been approving tuition hikes for years, sometimes twice in the same year, actually appear quite comfortable with multiyear fee increases. Since 2006, when tuition was $6,141, the regents have raised it each year by 8, 7, 26, 15 and 18 percent.

Meanwhile, the regents gave raises and incentive pay to some of UC's highest-paid executives, including Chief Investment Officer Marie Berggren, who got a $744,950 award for boosting UC's assets by $661 million beyond what was expected.

Senior Vice President John Stobo, in charge of UC's health system, received a $130,500 award for, among other things, reducing blood infections.

When Stobo's raise was announced and he was praised for his achievements, a health care worker - a member of a union that has been without a contract for months - jumped up from the audience and yelled, "It's sad that you give yourself all these raises. The decrease in infections is because of our work, but you guys get credit for it. Shame on you!"

Guards led her away.

A version of this article was recently published in the UCSC Disorientation Guide. We repost it here because we found it to be a very useful resource: a history of the UC from the perspective of austerity that collects and synthesizes a lot of otherwise dispersed data. Give it a read, and check out the rest of the disorientation guide as well.

As you go from class to overcrowded class this fall, you’ll want to forget that tuition last year was around $1,800 less than you’re paying now. Continuing a 30-year trend, the UC Board of Regents gathered in cigar and gin-soaked boardrooms over the summer to raise our tuition by 17.6% and lay down plans for further increases in January, or maybe just raise tuition 81% over the next 4 years. (Hey, overcrowding at least improves your chances of getting lucky; tuition hikes on the other hand, just increase the probability of working a shitty job in college and plenty of debt after). The UC Office of the President (UCOP) never tires of reminding us that tuition increases are the recession’s fault or scolding us that Californians are just unwilling to spend on education in hard times; this is a strange excuse though, since state funding has been decreasing while tuition has been skyrocketing since the early 1990s. Even while UCOP continues to whine about how poor it is and how unfortunate it is that they need to raise tuition, it’s offering the state of California a billion dollar loan from UC financial reserves. As it happens, in 9 of the past 10 years tuition was raised – well before the 2008 recession began; UCOP’s insistence on the necessity of this recent series of tuition increases has so many logical fallacies that if it were an assignment, it’d get an F (assuming, of course, that the overburdened TA grading it even had time to pay attention to it). Tuition hikes and budget cuts – at all levels of California higher education – are part of the decades-long process whereby the richest assholes in California (and the greater US) intend to make private what few institutions remain in public hands.

The other day, we wrote a brief post on the renovation of Lower Sproul Plaza at UC Berkeley, reading it (following Bob Meister's now classic exposé) as yet another capital project funded by UC construction bonds that are, for their part, backed by student tuition. Mostly we were interested in the way UC administrators imagined their accountability to the students who increasingly "foot the bill" for pretty much everything the university does, and we didn't get into the technical details of the project because, well, we aren't so great with that kind of stuff.

Fortunately, it turns out we didn't need to. After a brief back-and-forth in the comments of that post, Zach Williams has written an incredibly useful and detailed investigation into the funding mechanisms for this particular project. Think Charlie Schwartz with a killer instinct. Williams's analysis is not only useful for understanding this particular case, but more generally it serves as a framework or methodology for understanding UC capital projects, for seeing through the obscure complexity of these financial deals. This complexity offers the UC administration another rhetorical weapon to be deployed in its war on students and workers. We're going to post the conclusion here, but we highly recommend reading the full post:

The Lower Sproul renovation is funded, almost entirely, by payments from the students, despite University protestations to the contrary. . . .

13 million is from campus funds -- some of which is sourced from student fees, though not student tuition.

200 million is externally financed. This 200 million in financing is backed by two sources:

1. 112 million in special student fees, proposed and approved by the students themselves.
2. A General Revenue Bond

So, half of that external financing (which is, if you recall, nothing other than a general revenue bond, though it may be a federally subsidized one) will be financed by . . . another general revenue bond. The rest will be footed by a sort of ‘complicit in one’s own domination’ decision by the ASU to help turn a basic safety retrofit into a project to increase space for students, student organizations, and student run revenue streams.

And that general revenue bond will be financed by student fees. Quite clearly, none of the 35% of funding from grants is going to this capital project. Rather, it will be financed entirely from auxiliary and student fees. And the bulk of auxiliary fees are . . . oh, right, student fees.

So, let’s list no bullshit sources of revenue for this project.

1. Student fees (campus funds)
2. Student fees (special student fee)
3. Student fees (registration fees)
4. Student fees (auxiliary fees from housing, dining, parking, and so on)

SAN FRANCISCO -- University of California Regents voted Thursday to raise tuition by 9.6 percent -- on top of an 8 percent increase already approved for this fall -- over the objections of students who said they'll drown in debt.

At the same meeting, the regents also gave large pay raises to three executives, including two who are paid from state funds.

This fall, undergraduate tuition will rise to $12,192, more than 18 percent higher than last year's $10,302 -- a level that prompted violent student protests. With a mandatory campus fee of $1,026, a year at UC now costs $13,218 before room and board.

That's more than twice what it cost in 2005.

If austerity is class war, as our compañeros at Bay of Rage like to say, then these repeated tuition hikes should be considered a weapon in the administrative arsenal. Notably, the regents themselves relied heavily on war rhetoric today in discussing student tuition. Sherry Lansing, the regents' recently inaugurated chairperson who stumbled through the motions of her new role today, called for students to join with "staff and chancellors and all of us" to "continue this battle." For his part, Richard Blum, husband of U.S. senator Dianne Feinstein, huge investor in for-profit education, and perhaps the single most corrupt of all the regents, outlined what he saw as the first step of this battle as follows: "we should determine who our friends are and who are our enemies."

We too see what's happening at the universities -- and in every other sector of this country -- as a form of war. But we draw different lines around our friends and our enemies. For regents like Blum and Lansing, the enemies are students, workers, and faculty. Each of these groups constitutes a target to be attacked via specialized instruments of war: tuition hikes for students, layoffs and wage cuts for workers and (to a lesser extent) faculty. That is why we are the crisis and the job of the university's corporate management is precisely that -- to manage the crisis, to manage us.

(image from the daily cal, quotes via dettman)

We talk a lot here about construction and debt, about the UC administration's addiction to using student tuition -- and the promise of future tuition increases -- as collateral to finance the sale of construction bonds. That's classic Meister. But it's important to remember that the UC's corporate management uses tuition in other ways as well. Remember, for example, how a couple days ago the state government asked the UC to loan it $1.7 billion, while the UC regents are once again raising student tuition at the exact same time? (The regents just officially approved the 9.6 percent additional tuition increase, on top of the 8 percent that had already been approved. So tuition will officially increase by 17.6 percent this fall.) Bob Samuels explains:

As we get ready for another large tuition increase, and we read about the elimination of several UC degree programs, the bond rating agency, Fitch, has re-affirmed the university’s strong fiscal standing. While the bond raters have been wrong in the past, we can still read the latest analysis of UC’s fiscal health as indicating the real priorities of the administration.

Since the UC has decided to help reduce its pension liability by selling about $1 billion of commercial paper (debt), it has asked to have its financial status rated. As I have argued in the past, due to the UCs high level of debt, it is dependent on getting a high rating from the bond raters so that it can receive a low interest rate, and one result of this dependency on debt is that the bond raters can tell the university how they think the system should structure its finances. Moreover, even though the bond raters pretend to be neutral and free of any ideology, they covertly push the same agenda that we find in the World Bank and the International Monetary fund. This agenda pushes for the privatization of public entities, a taking on of huge debts, and the deregulation of markets. The plan for the UC set out by Fitch is thus in many ways the global plan being pushed by conservatives and bond raters.

In reading the summary of Fitch’s report, we learn that the university has received a high rating because of, “UC's substantial level of balance sheet resources and liquidity; diverse revenue base, which enables the system to weather temporary weakness in any one funding source; and manageable debt burden, despite the expansive, capital intensive nature of its operations.” In other words, UC has many different revenue streams, and although it has a high level of debt, over $14 billion, it has the resources to take care of its financial obligations.

According to Fitch, one of the main signs of UC’s fiscal health is its ability to constantly raise tuition: “Recent reductions in state appropriations, and the potential for additional cuts through the intermediate term, are partially mitigated by the university's still considerable, though now more limited, ability to raise tuition and fees, and its overall limited reliance on state operating support.” In other words, the UC should not worry too much about losing state funds because it has shown a willingness to raise tuition. In fact, this same logic of privatization is driving the state’s reduction of funding for the UC; since the Democrats believe they cannot raise taxes, they cut the UC, which they know will turn around and raise tuition.

Not only does the state feel comfortable reducing the university’s funding, but they are planning to borrow another $1 billion from the UC system, and the reason why the administration will accept this deal is that the university will turn a profit by lending money to the state. This deal make sense on paper because due to UC’s high bond rating and the state’s low rating, the state has to pay a higher interest rate to borrow money, and if the UC lends money, the state can improve its bond rating, and the UC can profit from the difference between its low interest rate and the state’s high interest rate.

What is left out of this equation is that students are paying 6.8% to take out their loans, and these loans not only allow the UC to raise tuition, but the money generated from tuition can be leant to the state at something like 5%, which is better than the 2-3% the UC gets from putting tuition dollars into its Short Term Investment Pool. If we connect the dots, we see that students are lending money to the state, so that the university can bring in more money, but the end result is that the students will have to pay for this interest deal.

The UC administration and the regents, as dettman put it yesterday, "are simply another mechanism by which the state plunders the middle class to feed the rich."

From the Sacramento Bee:

The state wants the ability to borrow $1.7 billion from the University of California and California State University after slashing nearly a quarter of state funding for the beleaguered systems.

Legislation moving through the Capitol with scant notice, Senate Bill 79, would establish a new investment fund for UC, CSU, California Community Colleges and the Judicial Council. If necessary, the state could use that money to retire short-term loans from Wall Street or pay bills, while giving the universities above-market interest rates until a future payoff date.

UC plans to transfer $1 billion of cash reserves into the fund, while CSU will shift $700 million, according to officials at the two systems. The deal does nothing to relieve CSU or UC of the $650 million in cuts each system will absorb under the budget enacted nearly two weeks ago.

Gov. Jerry Brown's Department of Finance and Democratic lawmakers said AB 79 is necessary to persuade Wall Street to lend California money at competitive rates. Each year, the state receives the bulk of its tax revenue in the second half of the fiscal year and must borrow until then to pay bills.

Robert Turnage, CSU assistant vice chancellor for budget, said his system maintains about $2 billion in total short-term reserves. The money normally earns 0.5 percent interest with private managers.

Turnage believes CSU could earn 1.5 percent interest under the state deal. That would be a full percentage point above what the state now provides to other public agencies in the state's $66 billion Pooled Money Investment Account.

Asked why CSU isn't using the $700 million to offset fee hikes, Turnage said, "The budget cut that was just delivered by the Legislature is a permanent cut in our base funding from the state … If we were to draw down our short-term investment pool to avoid other steps like a fee increase, then we would have another hole next year."

In the words of a comrade, they pledged your tuition . . . to fund the prisons.

A few months ago, we wrote about a number of construction projects that are on the horizon at the UC and specifically about the way these projects are funded. As usual, the UC sells its highly rated construction bonds to raise the capital to carry them out. And ever since Professor Bob Meister published his now-infamous essay "They Pledged Your Tuition," we've known that student tuition, along with the promise of future tuition increases, are critical to the university's ability to maintain its high bond rating. As he wrote in the fall of 2009, "since 2004, UC’s highest priorities have been set by bond raters, and not by the State of California."

To be fair, sometimes there are other sources of revenue, but these cases are the exceptions. One of the examples we cited in the earlier post was the development project in Lower Sproul Plaza at UC Berkeley. The reason it came up at the time was that, even before the project had gotten underway, it had already gone $10 million over budget. Funding for that project comes, as the Daily Cal reported, from "contributions from the campus, the UC Office of the President and student fees approved . . . in the 2010 ASUC General Election." As we wrote at the time:

In other words, not only are students paying directly for the project -- after all, we voted for it! Democracy in action! -- we're paying for it indirectly as well, through tuition increases that have already taken place (that money goes into the general fund) and the promise of future tuition increases that the UC now owes the bond raters.

Today, the Daily Cal reports that this same construction project, which will take many years to complete, is already showing a negative cash flow. The article draws on a presentation given by an outside consulting firm, Brailsford & Dunlavey, which is based in Washington, DC. (It's not entirely clear how much the firm is charging for its services, but it's possible that we might be seeing a repeat of the scandalous Bain & Company contract worth $7.5 million.)

The consulting firm's presentation is noteworthy, though not in the sense that Messrs. Brailsford & Dunlavey were hoping for. For example,

A deficit as high as $800,000 may occur between 2019 and 2022, after an expected bump in revenue due to increased student fees in 2018, according to the presentation.

Either the consultants are privy to information about future tuition increases that the rest of us aren't or they're just making shit up (in which case why is UC Berkeley hiring them?). It's important to remember that privatization is not a response to immediate crisis but a long-term strategy. Tuition hikes, it appears, are plotted out years in advance. While they are adjusted to take immediate political concerns into account (like state budgets, for example), these adjustments are little more than slight deviations here and there from the original projections. [Update 7/12 10am: Our mistake. The comment below is correct on this point, that the fees in question are not actually tuition but rather the student fees approved in the vote. However, this doesn't change the fact that the construction project is still financed through multiple sources, including the sale of construction bonds backed by student tuition as collateral. In any case, you can find the schedule for increased student fees for the project here. Further update 7/14 12:39pm: For a full discussion of what the vote actually approved, and why the earlier comment isn't exactly right, check out the comment from Zach Williams below.]

But most important are the comments from Assistant Vice Chancellor for Physical and Environmental Planning Capital Projects Emily Marthinsen:

“If the students are footing the bill for things that are not only the students’ responsibility, then those things have to be very defensible,” Marthinsen said.

If the students are footing the bill... From her isolated office in the A&E Building, Marthinsen can't understand the full implications of her words. Because what Meister shows us is that as students we foot all the bills: "Because UC pledges 100% of tuition to maintain its bond rating, it has also implicitly assured bond financiers that it will raise your tuition so that it can borrow more. Since 2004, UC has based its financial planning on the growing confidence of bond markets that your tuition will increase." Defensibility, furthermore, performs an interesting function here. What administrators find defensible is obviously not defensible for the rest of us -- students, workers, faculty, those of us who use the university. But beyond that, the logic of defensibility is the logic of the liberal technocrat, the enlightened bureaucrat who cannot be held accountable for decisions and as such offers little more than explanations and well-formulated "defenses" -- at best -- that lock the rest of us into decades of debt.

From our perspective, however, the administration's drive toward privatization is simply not defensible. There is little use in appealing to their hearts or letter-writing campaigns or attending glossy presentations by highly-paid consultants. These are the administration's bureaucratic fortresses, sites designed specifically to be highly defensible. And paradoxically, our participation only makes them stronger.

(via surf city revolt)

[Updated Wednesday 6/29 10:03am]: The LA Times headline says it all: "Democrats Pass Austerity Budget for California": "The Legislature passed an austerity budget Tuesday night that would cut from universities, courts and the poor, shutter 70 parks and threaten schools but would not -- by officials' own admission -- restore California's long-term financial health." As for public higher ed, the Chronicle reports that tuition hikes at the UC and CSU are a "certainty." Also check out the graphic above: "Trigger Cuts, Chopping Blocks."

* * *

Two weeks ago, we wrote about the austerity budget that was coming through the California state government. It all turned on Governor Brown's call for a special election in mid-September in which voters would decide whether to approve five-year tax extensions as an additional source of revenue to ride out the financial crisis. Today that proposal has been scrapped:

Gov. Jerry Brown relinquished a cornerstone of his budget plan Monday by forfeiting a 2011 tax election and securing a deal with Democratic lawmakers that shortens the school year if tax revenues fall short of optimistic projections.

After months of seeking GOP votes, Brown decided four days before the new fiscal year that a bipartisan deal was impossible. The Democratic governor wanted Republicans to pass a temporary extension of higher sales and vehicle taxes as a "bridge" to a fall election, but Senate Republicans would not vote for taxes.

"I thought we were getting close, but as I look back on it, there is an almost religious reluctance to ever deal with the state budget in a way that requires new revenues," Brown said, sitting at the end of a wooden bench in his office with Senate President Pro Tem Darrell Steinberg and Assembly Speaker John A. Pérez.

In that earlier budget plan, Democrats in the California legislature proposed an additional $150 million in cuts to both the UC and CSU systems (that is, $300 million total), on top of the $500 million (again to each) that's already been cut. Brown vetoed that budget, but it's now clear that it wasn't out of a desire to protect public education:

Under the new plan, the University of California and California State University will each absorb additional $150 million reductions, for a total of $650 million apiece. They risk losing another $100 million each if the state falls short of revenues. The university systems already have said they will seek tuition hikes to offset new state reductions.

And it's likely to get even worse:

Based on additional revenues that have come to the state so far this year, the budget assumes a very optimistic revenue scenario for the rest of the year. But if the revenue estimates prove unrealistic then there are triggers for additional cuts. These include an additional $100 Million in cuts for both UC and CSU, the possibility of further cuts to K-12 and a further shortening of the school year [by seven days].

Yesterday, the Daily Bruin published an interview with outgoing chair of the UC regents Russell Gould, in which some pretty decent questions are posed (though there's not a whole lot of follow-up). One of the issues that came up was the recent budget passed by the Democratic legislature (on which today's deal is based). Why, the paper quite reasonably asked, should we believe in the UC administration's commitment to fighting for public education, let alone their strategy for winning that fight, especially when even the Democrats have apparently sold us out? Gould's pathetic answer:

Regrettably I think that Sacramento is listening to lots of voices. We’re among them, and I think we’ve got a stronger effort than we’ve ever had to push legislature and governor to push UC, but we’re fighting a lot of other interest groups that say, ‘We’re more important.’

Yet when I talk to legislators and talk to people in the governor’s office, they seem to understand the link toward building businesses, building opportunity and having (a) kind of society and economy that’s sustainable. But when it comes to the short-term decision they seem to put their resources in other places. And that’s what we’re continuing to fight.

And, right on time, UC president Mark Yudof comes out with a statement on his Facebook page outlining how the UC administration would "continue to fight," as Gould put it: by "fully supporting" Brown's attempt to balance the budget.

I fully support Gov. Brown's plan to bring the state budget into balance. This includes his call for an extension of certain temporary taxes that he believes is needed to act as a bridge until the plan can be placed before California voters.

In my view, what the governor has proposed offers the surest pathway available to a more stable fiscal future for all of California, including its public universities. Reliable state support is crucial to the continued excellence of the University of California and the students and families it serves.

Good to know you have our back, Mark.

Summer means no students -- for the UC administration, that means the absence of one of the largest obstacles to their privatizing designs. There's a similar logic in the UC regents' decision to hold their meetings at UCSF Mission Bay. It is a highly strategic space: not only is it extremely out of the way and difficult to get to from Berkeley, but it's also located in what is essentially a post-industrial wasteland, with little else around to provide cover. After thousands protested the meeting at UCLA in November 2009 to approve the original 32 percent tuition hike, it seems the regents decided to retire to less accessible locations.

Summer vacation is the temporal version of UCSF Mission Bay. It's not surprising that it was in July 2009 that the regents voted to give UC president Mark Yudof "emergency powers" due to the "state of financial emergency," which gave the administration unilateral authority to impose austerity measures. Especially as "shared governance" becomes less and less of a reality, we should expect more and more executive decisions to be made and policies to be approved at this time of the year.

The title of this article in the Santa Cruz Sentinel is right on: "During Serenity of Summer, UCSC Implements 'Painful' Cuts."

SANTA CRUZ -- UC Santa Cruz's wooded campus is relatively serene in the early days of the more quiet summer session.

Beneath the tranquility though, the campus is set to execute another round of cuts including laying off roughly 50 non-academic employees in what has become an annual occurrence since 2008.

The layoffs go into effect on Friday, July 1, the start of the new fiscal year. In addition to layoffs, workers are seeing their hours (and pay) cut back. As expected, these cuts will primarily affect non-academic workers. (While there are no layoffs on the academic side of things, 40 more faculty positions that are currently empty, and 120 teaching assistantships for graduate students, will be permanently eliminated.) While UC spokespeople talk about how much much their work is valued, they acknowledge that the student-as-consumer is the primary target.

"After years of reductions in state support, we've gotten to the point where every corner of the campus has been impacted by these cuts," UCSC spokesman Jim Burns said. "It's also true that units farther from the classroom have been particularly hard hit -- not because the campus doesn't value those areas and the people working in them. But because we have tried to the extent possible to reduce cuts to the academic areas in an effort to protect student access to the courses they need."

Much like the tuition increases, however, these poverty wages are not a function of the so-called financial crisis. Rather, it's a function of a class war that's been occurring for decades:

During her two decades at UCSC, [custodian Rosario] Cortez has held several second jobs, including other custodial positions and a job at a bread factory. Currently she works five days a week at UCSC, eight hours a day, where she earns about $2,200 a month after taxes, then makes and sells tamales on the weekends for extra income.

Cortez's sentiments were echoed by Ernesto Encinas, a cook at UCSC who cares for his 86-year-old mother and 14-year-old son.

"Everyone I know has a second job," Encinas said. "There is no rest with the wages we make here. You can't make ends meet with just the one job with the way cost of living keeps rising. Any little change in our income can be devastating."

With these cuts comes not a decrease in the amount of work expected but precisely the opposite: speedup. Custodians, for example, are required to clean more areas during a single shift. Administrators get around this in a curious way -- by telling workers, apparently, to "clean less," that is, to do a worse job at cleaning more areas. It's a recipe for disaster -- especially in the context of ongoing layoffs, this amounts to an incredibly difficult balancing act for the workers. On this note, check out what an asshole Jim Dunne, the director of UCSC's physical plants department, is:

"I have heard [the complaints]," Dunne said. "We often only have a few months to implement changes and rework how we do things. We are making a lot of effort to communicate to custodians what that redesign is, but adjustment takes time. It is a difficult situation for both sides. Custodians take a lot of pride in their work. When you tell them to clean something less, that's hard for them."

Yeah, that's the only thing that's hard for them.

If they ever doubted it before, UC administrators now understand that the best time to implement austerity are the summer months. Summer evacuates much of the potential resistance -- with students and faculty mostly away, the only thing standing in the way are the workers, precisely those hardest hit by the cutbacks. It also functions usefully as a time barrier -- one of the administration's most effective tactics is simply to wait protesters out. (Look at what's happened with the last two hunger strikes at UC Berkeley.) Finally, summer marks the point at which many veteran student protesters graduate and move on. For anti-austerity protesters, it will become increasingly important to incorporate the summer into strategic thinking. This does not necessarily imply a need for stable organizing structures, which contribute their own problems, but it does indicate the need to directly address and even intervene in some way during these months. After all, the success of the walkout on September 24, 2009 depended on the work that was done by students, faculty, and workers before the school year had even begun. This does not necessarily have to take place on campus. It could also mean looking to other organizing bodies outside the spaces of the university that are attempting to build capacity for resistance against austerity.

If fall is the moment of attack, and after the fall the moment of reflection, then before the fall is clearly the moment of preparation. But maybe it's time to rethink this calendar?

The other day we posted on the legislative operations that have produced a series of austerity budgets for the state of California. Of course, the services that are on the chopping block are both significant and diverse -- the cuts will affect far more than public education. But for obvious reasons public higher education is usually our point of departure. Anyway, in that post we looked at the responses of the UC administration to the Democrats' proposed budget plan, which would have included another $300 million in cuts to the UC and CSU systems (if it hadn't been vetoed by Governor Brown). First came the statement of UC spokesperson Steve Montiel, which noted that "Any further cuts would threaten our ability to provide access, affordability and academic excellence." Then we turned to a statement signed by UC president Mark Yudof and UC regent chair Russell Gould, which asserts that "An additional $150 million in cuts will impair our ability to provide access at an affordable price while preserving academic excellence."

Access, affordability, and excellence. These qualities -- which, it's worth mentioning, are defined only in broad, meaningless strokes -- are what Yudof has called the UC's three "compass points." Here's how Yudof referred to them at the UC regents' meeting in January 2011 (this quote is under pretty heavy rotation these days):

Yudof said the university has long operated on three "compass points" -- access, affordability and excellence.

"We are moving dangerously close to having to say: pick two of the three. That’s my view, and the excellence is nonnegotiable," he said. "We are going to have to look at access and affordability."

Yesterday, the day after the statements from Montiel, Yudof, and Gould were printed, Chancellor Robert Birgeneau published his own statement, which was emailed to the entire UC Berkeley campus and is posted here. He writes:

As you know, Berkeley already faces extraordinary challenges for the coming year. Our share of the $500 million cut from the Governor’s proposed budget is about $70 million. On top of the proposed cuts, the campus has additional mandatory increased costs such as utilities and health care benefits for which we must find $40 million. Thus, in effect, we are already facing $110 million in cuts for 2011-12 and we cannot sustain any further cuts without placing an intolerable burden on our students and staff. Specifically, the legislature’s budget would have added as much as $25 million to this shortfall, an amount which we simply cannot bear. Not only would this be very painful for our campus, it would ultimately be damaging to the economy and future prospects of California.

As usual, the official response takes a specific form: it once again turns on the logic of the words further/additional. This formulation erases everything that has already happened, removes it entirely from the political horizon. As we wrote here last month,

In addition to erasing the violence of austerity . . ., this strategy charts a path of rhetorical retreat. Obviously this isn't a rousing defense of public education. But it leads to another danger: every time the budget is cut, it's a "disaster"... until the cuts go through. At that point it becomes the new normal. In effect, it represents an attempt to limit political struggle to a relatively minor question about what's currently on the table -- everything else simply disappears.

That's bad enough. But, to return to Yudof's "compass points," something unexpected goes wrong in the next paragraph of Birgeneau's statement:

I know that the Cal community cares deeply about public higher education and understands the importance to the state and to the nation of the education, research and public service that we provide. I want to assure you that we will not compromise on our principles of Access and Excellence. I urge you to join me in telling your local legislators, leaders in the Assembly and Senate, and Governor Brown himself that they must arrive at a budget agreement that does not require further cuts to the University of California.

Either Birgeneau didn't get the message (shhhhhh!) or the decision that Yudof was alluding to back in January has already been made. Not that we were under any illusions about the UC administration's commitment to "affordability." Tuition has skyrocketed, up 40 percent in the last two years and 300 percent in the last ten.

When even the rhetorical flourishes have disappeared, nothing will hold back the coming wave of tuition increases -- or stop the plodding advance toward privatization.

We generally rely on other folks to analyze the budget at the state level, especially as it relates to public education but more generally in the current context of austerity. Instead we usually prefer to focus our attention on the UC administration and the UC regents. But so far we haven't found anything that lays out the process and timeline for the austerity measures that are going to be imposed on the UC in the near future. That's what we want to do here.

First of all, there are a couple of upcoming dates that are important. Today, June 15, marks the deadline by which the state legislature has to pass a budget. If they don't pass one by midnight, their salaries will be permanently docked, as stipulated by a new ballot measure that was approved here last November. Without getting into the boring and mostly irrelevant details of the party politics involved in these decisions, the bottom line is that the Democrats have finally produced a budget proposal, one that they can pass without any Republican votes. Included in the proposal are another series of cuts -- surprise surprise! -- including a additional $300 million of cuts to the UC and CSU systems ($150 million to each), on top of the $500 million already cut, as well as the deferment of $540 million already owed to the UC and $750 million from canceling "old school debts" (money owed to public schools?). As thosewhouseit noted this morning, these cuts will devastate K-12 and higher education in California -- both of which, as we well know, have already been decimated by massive cuts.

So, as expected, this is a shitty deal. It's austerity, plain and simple. It's not necessarily going to pass, since Governor Brown could theoretically veto it [Update Thursday 11:13 am: Brown has officially vetoed the budget plan], but what's important is the generalized agreement by pretty much all of the political elites involved in the decision-making process, regardless of their party of affiliation. In broad strokes, they are all in agreement as to what the problems are and as a consequence the solutions as well. Take a look, for example, at Brown's recent video statement on the budget.



What Brown presents in the video -- and remember, of course, the Brown is a Democrat -- is a series of austerity measures. He calls explicitly for "deep and permanent cuts to ongoing state programs" and what he labels "reforms," which refers above all to the reformulation of public sector pensions and, as he puts it, "a cap on ongoing state spending." Furthermore, the taxes that Brown is calling for are temporary.

Which brings us to the next set of important dates. July 1 is the beginning of the new fiscal year, which means (for our purposes here) that the state sales tax will decline by 1 percent and the vehicle registration tax by 1/2 percent. Governor Brown's tax proposal, then, has two parts: first, it postpones the expiration date of these taxes until mid-September; at which point, second, a special election will take place in which California voters will vote on whether or not to extend these same taxes for another five years. At worst, then, the vote will fail, and the taxes will not be extended -- this seems like the most likely outcome at this point. But what's most depressing about the whole thing is the fact that the taxes are at best temporary. In other words, the entire premise of Brown's proposal is that services provided by the state must be eliminated -- the only question is how fast the transition will be. It's not that we didn't know this already, of course. From the beginning, Brown's politics have been characterized by a commitment to austerity.

In some sense, the special election in September will have large consequences for California public education. If it fails, UC spokespeople have stated, tuition will be jacked up by another 32 percent at the beginning of the winter 2012 semester. (And remember, that's on top of the 8 percent hike that's already been programmed for fall 2011.) This would bring in-state tuition in the UC system to $15,000 a year. But at the same time, the UC administration has already made the choices that have condemned the entire UC system to privatization. The regents are incapable of making a case for public education not because they're bad speakers or because they've misunderstood the subtle details of the university system but because they don't give a shit about public education. As in the case of the $500 million already cut from the UC in the first round of budgeting, every defeat becomes the point of departure for the next one. More than just a losing strategy, we could easily read this as purposeful -- it allows the administration to continually deflect blame while moving the university toward a privatized model.

Right on cue, the UC once again trots out the same old arguments. Here's what UC spokesperson Steve Montiel told the Sacramento Bee about the Democrats' new budget, which includes the $150 million cuts mentioned above:

"We are assessing the latest proposal from the state Senate, and it's too soon to say with certainty what the impact would be. But there's no question that additional cuts would not be good news for UC and the Californians it serves. The university already has taken steps to absorb a $500 million cut, and we have been preparing contingencies in the event of an all-cuts budget. Any further cuts would threaten our ability to provide access, affordability and academic excellence."

And now, UC president Mark Yudof and UC regent chairman Russell Gould have released the following statement:

UC, like the California State University, already has taken steps to absorb a $500 million cut with substantial impacts to programs on the campuses. An additional $150 million in cuts will impair our ability to provide access at an affordable price while preserving academic excellence and allowing students to complete their degrees in a timely way. If this budget plan stands, the likely result will be a double-digit tuition increase on top of the 8 percent hike already approved for next year.

It's the usual trope -- both formulations turn on words like further and additional. What's especially revealing here is the way that Montiel, Yudof, and Gould frame the consequences of these further/additional cuts. Because the talking point of the managerial trinity of "access, affordability, and academic excellence" on the proverbial chopping block has been active since early January at the very latest, when Yudof laid out the changing relationship toward what he called the UC's three "compass points":

Yudof said the university has long operated on three "compass points" -- access, affordability and excellence.

"We are moving dangerously close to having to say: pick two of the three. That’s my view, and the excellence is nonnegotiable," he said. "We are going to have to look at access and affordability."

To return to the statement by Yudof and Gould for a second, take a look at the sentences that come right after the above quote:

And to require UC to carry a $500 million "loan" balance into fiscal year 2012-13 because the state can't provide UC with the fully budgeted allocation will only force the university to incur extra costs that are passed on to students and their parents. In addition, this budget plan poses a threat to UC and higher education in future years as it fails to achieve a sustainable, balanced budget. Without a stable, predictable funding base, our long-term quality is seriously threatened.

It's worth noting that the regents haven't had any problem with passing on "extra costs" to students and parents in the past. That's why tuition has increased 40 percent in the past two years, and 300 percent over the past decade. But what's especially interesting here is the tension between the seemingly out of place call for a balanced budget and a "stable, predictable funding base." After all, the requirement of a balanced budget is precisely the reason that these new cuts have been proposed -- according to the new ballot proposal, the Democrats in the legislature must pass a balanced budget or face a pay cut. So what they've done is cut us instead.

In the end, the "stable, predictable funding base" called for by our corporate overseers gives us the key to unraveling their odd statement. They know, as we do, that the state will never provide the kind of financial stability or predictability they seek. Yudof has long called the state an "unreliable partner" and he has been given no reason to think differently. What this statement does is begin to lay the groundwork for a full shift toward the corporate university -- the "stable, predictable funding base" that the state cannot supply will be sought elsewhere. And we all know where that elsewhere is.

Don't forget:

Oakland: Friday June 3, during Art Murmur

- Gather at 7:30, Broadway @ Telegraph,
- Guerrilla Film Screening at 9:30 following march

*Note: There’s a chance of some scattered showers tomorrow night. We’ll be there either way.

At the most recent UC Regents' meeting, which took place over the past two days, Sherry Lansing was elected to be the new chair of the board, replacing outgoing and two-time chair Russell Gould. So who is Sherry Lansing? The Daily Cal reports:

Prior to her appointment to the board, Lansing was a high school math and science teacher in Los Angeles.

Aw, that's so sweet. She's really just like one of us. She's truly the "middle-class" regent we've been looking for to protect us from these budget cuts!

She also ran her own production company and most recently was the chairman and CEO of Paramount Pictures.

... oh. Well, okay, she was the CEO, but movies are fun though, right? Everybody loves movies. She was involved in the production of Forrest Gump! Maybe she's not one of these corporate assholes who make up the rest of the board. Why don't we check in with our good friend and investigative reporter Peter Byrne, to see what he has to say about Regent Lansing:

Since September 2006, Regent Lansing (who is not on the investment committee) has been a member of the board of directors of Qualcomm Inc., for which she receives an annual director’s fee of $135,000, plus stock options. According to her economic disclosure statement, Ms. Lansing owns “more than $1 million” in Qualcomm stock options (no upper limit is specified). In 2009, Qualcomm paid her $485,252. Documents released by the UC Treasurer show that, after Ms. Lansing joined the Qualcomm board, UC quadrupled its investment in Qualcomm to $397 million. Ms. Lansing told us that she did not instruct the treasurer or members of the investment committee to buy Qualcomm stock.

Hmmmm. Okay, well, at least we should give Lansing a chance to explain herself and her positions to us, you know, in her own words:

"I'm honored to serve as chairman during these difficult economic times," Lansing said in a statement. "To meet our challenges, we have to look for cost savings as well as other sources of revenue. But as we face these financial struggles, one thing we will never, ever sacrifice is the quality of a UC education."

Two quick thoughts on the commitment to "never, ever sacrifice . . . the quality of a UC education." First, online education. Nuf said. Second, we keep coming back to this quote from Mark Yudof (not only UC President but also himself a member of the board of regents), which does a nice job of contextualizing what this talk about "quality" really refers to. In a statement after the January Regents' meeting, Yudof made the following comment:

Yudof said the university has long operated on three "compass points" -- access, affordability and excellence.

"We are moving dangerously close to having to say: pick two of the three. That’s my view, and the excellence is nonnegotiable," he said. "We are going to have to look at access and affordability."

If "quality" and "excellence" are as commensurable as they sound, then Lansing's statement suggests that Yudof's "compass points" continue to shrink: the plan is no longer to pick two of the three, but to focus on one.

And these tuition hikes could be implemented as of winter 2012:

SAN FRANCISCO -- University of California tuition could soar next year if Gov. Jerry Brown's state budget plan doesn't pan out.

School administrators told the UC Board of Regents Wednesday the university would likely have to raise tuition 32 percent for the winter 2012 [on top of the 8 percent already programmed for fall 2011] term if the state doesn't extend temporary tax increases as Brown proposes.

Under that scenario, California residents would pay nearly $15,000 in tuition to attend one of UC's nine undergraduate campuses.

The governor has already signed legislation reducing support for UC by $500 million to roughly $2.5 billion for the coming fiscal year.

When Brown issued his revised budget proposal Monday, he warned that UC could lose another $500 million if the state does not extend the taxes. So far he doesn't have enough Republican support for his plan.