patrick.net

Bloated pensions and union wages.

Lots of money is spent on wages, check out the second link for a breakdown of UC revenues and expenditures in pie form:

http://www.universityofcalifornia.edu/budget/
http://www.universityofcalifornia.edu/news/factsheets/2010_11_uc_budget_charts.pdf

They claim that only a tiny fraction goes to senior management, but I suspect this is a highly fudged number (how is senior management quantified? how is their pay & benefits quantified?)

Research actually generates money for universities. From the suggested charts you can see that 17% of input funds for UC for 2010-11 was from competitive governmental research grants. Additionally, some of that 25% from the med centers is probably $ scored from private source research grants.

@terriDeaner

Wow.. thanks for the details.

All of them are seeing less tax revenues supporting their programs. Cutting their costs and raising tuition is used to keep it afloat. It's not like Angelo Mozilo stuffing millions into a carpet bag. Nobody's getting raises and pensions will suffer. Here at UC Davis departments are being closed to reduce overhead, example Applied Sciences which was started by Edward Teller (yes, that one) is being shuttered and some of it's faculty folded into larger problems. Not because Applied Sciences was running in the red, no far from it they brought in more research funding than they incurred in overhead, but because admins say they can realize cost savings by combining staff and cutting positions.

Vicente says

Cutting their costs and raising tuition is used to keep it afloat.

Did you see that Brown is currently playing bugetary chicken by threatening serious student fee hikes:

Brown warns of soaring UC costs in all-cuts budget
http://www.mercurynews.com/breaking-news/ci_17784749?nclick_check=1

In an address to the California Hospital Association, Brown said UC undergraduate fees could hit $20,000 to $25,000 a year if the Legislature approves and he signs an all-cuts budget.

Current fees are nearly $12,000 for in-state students, plus thousands of dollars more for books and other fees. They are scheduled to rise by more than $900 a year next fall.

At that price it would probably be cheaper for many CA students to attend out-of-state schools!

On a lighter note, I would like to see him do this though (from the same article):

"In fact, I'm going to go up and down the state to see if I can't hug Republicans and say we love you, but give us a break, let the people vote," he [Brown] said.

In my campus IT department, now we don't get training we used to, and there was never any "end of year" orgy you describe.

Medical has always seemed different to me. I worked with a biomed department and it seemed they were swimming in cash.

YMMV.

What I don't understand is that even with the cuts, aren't universities getting much more money then they did 8-10 years ago?

@Bubble Bubble

I have to get myself one of them "whirlymagigs".

Haha, umm no. Well not when you consider increasing class sizes, inflation, etc. Last time I remember having the feeling it was UP UP UP for University budgets was late 1990's when it seemed everyone was swimming in investment money. I vividly recall the College of Management then was named after a Richy Rich with a lot of money who had it flowing in a steady yearly stream. 2000 was the last time I made pretty decent money. Then whoops market crash he wasn't rich and the name came off the building. Oh and by the way I got laid off.

When I came to California there was a LITTLE of that feeling around 2005 when all the housing bubble insanity had bubbled up tax revenues, but it was never as big and didn't last long.

Both places I've worked were in expansion mode, building new stadiums, dorms, adding more students. We staff always felt behind the eight-ball. At one point I worked with a department that had found all the money to build a shiny new department building, but for about 3 years it was only 3/4 full because they had shot their first wad so hard and had little money for faculty and staff. As with any empire the first focus of the BIGWIGS seems on growing the empire in terms of SIZE and things you can touch and people are kind of an afterthought. They'll watch the paperclip budget like hawks while they covet neighboring land and plot like they're invading Poland.

I read somewhere online that UNLV (vegas) spends 80% on salaries & benefits. I find it hard to believe because they always have construction going on...

I just went and looked up factbook for my alma mater & prior employer:

The Georgia Institute of Technology is a public institution that receives funds from the State of Georgia, tuition, fees, research grants, and alumni contributions. In 2010, the Institute's revenue amounted to about $1.159 billion. 19% came from state appropriations and grants while 15% originated from tuition and fees. Grants and contracts accounted for 49% of all revenue.

Expenditures were about $1.094 billion. 45% went to research and 20% went to instruction.

Not a typical university though, as an engineering school the graduate student & research population was pretty big. When you say "salaries & benefits" there could be money that flows into the budget to get something done, which flows right into the pockets of the researchers doing the work with a cut for overhead. The Endowment, was a large pot of wealth the Institute held and invested.

I'm no longer sure there's a "typical" University, they all have some oddity. Like UC Davis is a Med School and hospital hitched up to an Ag school.

UC Davis also invented the wine wheel!

The private university presidents are taking a much larger salary too:

http://patrick.net/?p=657973

(Thanks Vicente).

Well it's good to know that certain parties in Congress are blocking any efforts to reform, regulate, or even restrict access to Federal funding from the worst offenders in the for-profit Universities.

WASHINGTON -- The House of Representatives continued its attacks on the Department of Education's crackdown on for-profit colleges with a hearing Thursday aimed at undermining proposed regulations.

The Education and the Workforce Committee, led by Republican John Kline, R-Minn., staged a hearing to spotlight the positive side of the fast-growing industry and provide evidence that new regulations would unfairly hinder it.

New regulations on for-profit colleges attacked in U.S. House hearing

Vicente says

Well it’s good to know that certain parties in Congress are blocking any efforts to reform, regulate, or even restrict access to Federal funding from the worst offenders in the for-profit Universities.

Appalling, really. From your article:

Their concerns were echoed by Jeanne Herrmann, the chief operating officer of for-profit Globe University in Minnesota.

"If better metrics of quality are the concern, then requiring minimum outcome measures such as placement and graduation rates are better measures of value and quality of education for students than debt load or repayment rates," she said.

And much more easily manipulated by the for-profit institutions than measures like debt-to-income ratios and post-graduation default rates.

Well some of *it* comes from here:

Student Debt Mounts, Shifting Graduates’ Options
http://www.nytimes.com/2011/04/12/education/12college.html?partner=rss&emc=rss

“When you think about what’s good debt and what’s bad debt, student loans fall into the realm of good debt, like mortgages,” Professor Dynarski said. “It’s an investment that pays off over the whole life cycle.”

which, in part, explains why many students who are given poor financial advice ultimately become debt-slaves for a good deal of the adult phase of their 'life cycle':

In 2009, the Obama administration made it easier for low-earning student borrowers to get out of debt, with income-based repayment that forgives remaining federal student debt for those who pay 15 percent of their income for 25 years — or 10 years, if they work in public service.

Of course there are some people out there with common sense who care about our young people:

Deanne Loonin, a lawyer at the National Consumer Law Center, said education debt was not good debt for the low-income borrowers she works with, most of whom are in default.

But that's probably because she has EXPERIENCE dealing with negative outcomes when good intentions meet poor planning and stark reality in the REAL WORLD.

“About two-thirds of the people I see attended for-profits; most did not complete their program; and no one I have worked with has ever gotten a job in the field they were supposedly trained for,” Ms. Loonin said.

“For them, the negative mark on their credit report is the No. 1 barrier to moving ahead in their lives,” she added. “It doesn’t just delay their ability to buy a house, it gets in the way of their employment prospects, their finding an apartment, almost anything they try to do.”

Not everyone who disagrees with you is a selfish parasite, nomo. Some people actually care where the dough is COMING FROM as well as HOW IT IS SPENT. *All* part of the same equation.

Nomograph says

People seem to have no problem as long as they think the money is going to some inanimate object like buildings or infrastructure, but as soon as they realize that money always goes to someone, they cry foul because it isn’t them.

Nomograph says

What people here don’t seem to realize is that *all* money goes to someone’s salary.

Is this anecdotal? It smells anecdotal...

I have a good idea where it is coming from. Thanks for the posts so far everyone...

terriDeaner says

Is this anecdotal? It smells anecdotal…

Nomo is very young man. You have to give him some more slack.

I don't understand why people so willingly take on insane debt these days. When I went to college at the age of 19, I took out no loans, I simply worked through it on minimum wage. My wife on the other hand had a small student loan, and ended up paying it off eventually by the age of 35. I remember that date clearly when we sent the last check.

Yet some people today are just plain stupid with money. They take on huge debt so frivolously. I can't really blame for profit universities for this. It's not like they are holding a gun to these peoples heads telling them to go into debt.

terriDeaner says

Nomograph says

What people here don’t seem to realize is that *all* money goes to someone’s salary.

Is this anecdotal? It smells anecdotal…

that's how I analyze things. At the end of the day, the 3 factors of production -- labor, capital, and land -- get their due -- wages, interest, and rent.

Missing from this analysis is "obscene" profits, which generally are "economic rents" (and not related to land rent, though land rent consist mostly of economic rent since the land, being a gift from the Maker has a minimal "production cost".

Labor is the dominant piece of the production puzzle. Even when we use labor-saving capital like power equipment and computers, these items also had to be designed, manufactured, maintained, and managed by labor.

I would like to simulate the US economy to accurately analyze how these 3 factors inter-relate. I think there's an immense amount of "old money" sloshing around that is a great suck on labor, and has been since the New Deal -era tax levels got rolled back 1960-1985.

zzyzzx says

Bloated pensions and union wages.

More like executives and upper management:

http://universityprobe.org/2011/03/new-data-on-management-growth-at-uc/
http://ucpay.globl.org/crisis_of_priorities.php

There are certainly waste on material things and many other issues, but I would argue that the problem starts at the top.

And no, I am not pro-union as I:

a) have had first hand experience seeing the union's own incompetence
b) do not belong to a union
c) think union members should get to individually choose whether s/he wants to opt-in to a union

@mrchanman

Thanks!
ありがとう

Bubble Bobble says

So, for 1 day, there would be a massive orgy of spending, buying unneeded laptops, printers, furniture, whirlymagigs and uselessmabobs. We are talking 10k surplus in a department of maybe 10 people. They would spend every last dime, so the ‘need’ for their funding was justified. Those who didn’t spend it all watched their funding go from their dept to the depts that spent all of their money, so they were in essence punished for being honest.

Government works the same way. Various departments in local, state and federal will NEVER cut their budget on their own accord because their attitude is "if our department is cut, another department will use up that money, so we might as well take it, etc." This is a huge reason that spending continues to spiral out of control. People on the outside that haven't witnessed this from the inside fail to understand how the system really operates.

Bubble Bobble says

So, for 1 day, there would be a massive orgy of spending, buying unneeded laptops, printers, furniture, whirlymagigs and uselessmabobs. We are talking 10k surplus in a department of maybe 10 people. They would spend every last dime, so the ‘need’ for their funding was justified. Those who didn’t spend it all watched their funding go from their dept to the depts that spent all of their money, so they were in essence punished for being honest.

That is government accounting 101 - use it or lose it. Raid everyone else's budget at the start of the fiscal year, blow every nickel that is left over at the end. Of course, it really depends on where you are in the food chain - you might get plundered at the whim of someone else or be surprised with a last minute shopping spree.

RayAmerica says

People on the outside that haven’t witnessed this from the inside fail to understand how the system really operates.

Been there, done that, seen it at both the federal and state level. Grant money is absolutely the worst - many times they have a 1 for 1 match but the peeps figured out you can match someone's salary against multiple grants or even match one grant against another. Don't get me wrong, the full time grant writers were nice people...

Troy says

that’s how I analyze things. At the end of the day, the 3 factors of production — labor, capital, and land — get their due — wages, interest, and rent.

Missing from this analysis is “obscene” profits, which generally are “economic rents” (and not related to land rent, though land rent consist mostly of economic rent since the land, being a gift from the Maker has a minimal “production cost”.

Labor is the dominant piece of the production puzzle. Even when we use labor-saving capital like power equipment and computers, these items also had to be designed, manufactured, maintained, and managed by labor.

This is an interesting way of reducing dimensionality to model a complex system of exchange, but it seems like too much information is lost in the process. For instance, what about efficiency and waste? I'm not trying to yank your chain here - some practical, and preferably quantitative, examples would be appreciated.

That said, nomo's anecdotal, reductive model to wages only (i.e. *all* input is eventually output as wages), still seems specious at best, particularly as it was capped with a blob of self-righteous crapola:

Nomograph says

People seem to have no problem as long as they think the money is going to some inanimate object like buildings or infrastructure, but as soon as they realize that money always goes to someone, they cry foul because it isn’t them.

RayAmerica says

Government works the same way. Various departments in local, state and federal will NEVER cut their budget on their own accord because their attitude is “if our department is cut, another department will use up that money, so we might as well take it, etc.” This is a huge reason that spending continues to spiral out of control. People on the outside that haven’t witnessed this from the inside fail to understand how the system really operates.

Add to that a union seniority system which completely decimates any innovation and we have our less-than-average public education and CTA which pretends to care and whines about not having enough money while spending millions on campaign attack ads and political contributions.

Good point Chris.

RayAmerica says

Good point Chris.

Thanks Ray, likewise.

From what I have gathered, a the lion's share has gone into paying salaries of "extra" management.