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Features May 2004: Volume 1, Number 2
   

The Budget Rollercoaster
By Sylvia Tiersten

 
     

Color him sticker-shocked. “I look at my first-year tuition, and I’m surprised at how much it’s gone up,” says Rigo Marquez, vice president of external affairs for Associated Students (AS).

Since 2002, UCSD resident undergraduate fees have jumped from $3,384 to $6,230. Add in room and board, books, transportation and incidentals and you are looking at $19,675 a year. By living at home, students can shave $5,000 off the tab. But commuting is not an option for Marquez, whose family lives in Los Angeles. “I’m on my own at UCSD. I get no financial assistance from my parents,” says Marquez, a senior who is a first-generation college student—and the first member of his immigrant family to earn a high school diploma.

Marquez transferred here three years ago from Santa Monica College. As a community college student, he managed to hold down a full-time position. As a UCSD student last year, he worked three jobs to cover his food and rent. “I went from making $20,000 a year to making $400 a month,” says Marquez. When he graduates this May, he’ll owe about$20,000 in Stafford loans.

“The University of California system is very elitist, because it’s telling me you need to come from a background where your parents can support you,” he says. “It’s starting to be more like a private-school education.”

Marquez’s financial plight is not unique. This year, cash-strapped California faced a $15 billion budget shortfall and the prolonged fiscal crisis is threatening educational opportunity throughout the state. It is part of a long-term pattern. Currently the UC system receives 3.5 percent of the state general funds—compared with 7 percent in 1970—but even in the flush Clinton years, state education subsidies were drying up.

“California no longer has the ability to subsidize a low-cost education. Individuals will be paying more and more for their public education,” says Vincent De Anda, UCSD director of student financial services.

The unintended consequence, worries Marquez, is a homogeneous public university that does not look like California. “How will the UC system be accessible to low income students like my friends and myself?” he wonders. “It’s a sacrifice for us to get here, and it’s an even bigger challenge to stay here. Students of color are already among the hardest hit.”

Compared with other academic institutions, UC’s support of needy students has been stellar. The UC system currently enrolls nearly 50,000 students who receive Pell grants, with recipients typically coming from families earning less than $35,000 a year.

Policy analyst Tom Mortenson recently surveyed access to higher education at the top 150 public and private universities ranked by U.S. News and World Report. UC undergraduate campuses garnered the top six positions for enrollment of low-income students. UCSD, with 28.3 percent of its students qualifying for Pell grants, ranked fifth on the list.

Despite the recent increases, the current fee for UC resident undergraduates is about $1,200 less than the average tuition at the four other public universities UC regularly uses for fee-comparison purposes: University of Illinois, University of Virginia, University of Michigan and State University of New York (SUNY). Factor in the cost of living, and UC is slightly more expensive than the others.

However, the bottom line is that the financial squeeze is being felt across the nation. “Governors all over the country are struggling with higher-education funding,” says Jerry Kissler, UC’s assistant vice president for budget planning. “On the one hand, a college education is a lifestyle issue—and it’s more important than it was 40 or 50 years ago. On the other hand, a larger portion of the state budget is needed for aging baby boomers.”

***

It could have been worse for California. Governor Arnold Schwarzenegger’s 2004-05 budget contained a few eleventh-hour reprieves. Outreach programs that help high school students get into UC and succeed there mainly escaped the ax. Although fees were increased by 14 percent, budget cutters served up enough Cal Grant financial aid to cover the 32,000 needy UC students. And 5,800 UC-qualified freshmen learned—somewhat belatedly—that they need not cool their heels at a community college for the next two years and they could enter UC posthaste.

A six-year compact between the governor, UC and California State University laid out maximum fee hikes and minimum funding levels through 2010-11. Among the wait-till-next-academic-year carrots: a return to cost-of-living raises for faculty and staff after three flat years, and a 2.5 percent increase in student enrollments for 2005-06.

“It appears we are at last turning a corner,” said UC President Robert C. Dynes, once the budget ink was dry. But UC did not exactly heave a collective “whew.” Some skeptics questioned the ink itself: whether it was permanent or disappearing.

“A higher-education compact is for planning purposes—to give UC some kind of assurance,” says Anthony Simbol, principal fiscal and policy analyst for the nonpartisan Legislative Analysts’ Office (LAO) in Sacramento. “The Legislature is not bound to approve the agreement—and there is no certainty the funding will be there.”

When California’s economy goes south, compacts typically get underfunded. During the final years of the Governor Davis administration, for instance, the state could not find the money to honor the compact.

The present multiyear agreement is on similarly shaky ground. “The governor’s budget relies on the economy turning around. If that doesn’t happen, all bets are off,” says UCSD’s De Anda.

The multiyear agreement calls for 8 percent fee hikes for the next two years and a 10 percent cap on increases after that—even if fiscal woes drag on. The pact earmarks between 20 and 33 percent of any annual fee increases for financial aid. The compact, assuming it is fully funded, buys time for California to gear up for Tidal Wave II: the demographic avalanche of baby boomers’ kids who will reach college age by 2010.

To third-year student and AS commissioner for diversity Christopher Sweeten, the pact is disastrous. “It may relieve fiscal problems for a little while,” he says. “Long term, though, you can’t keep raising fees on students who don’t have money in the first place. Students are the ones who, after they graduate, bring fiscal health to the economy.”

***

Since 1960, the California Master Plan for Higher Education has emphasized access, quality and affordability. For the better part of three decades, it promised tuition-free education at UC to any state resident in the top 12.5 percent of the statewide high school graduating class. And even though fees for UC resident undergraduates jumped 157 percent from 1989 to 1995, the spirit—if not the letter—of the plan remained intact. Any fee rise was accompanied by substantial gains in student financial aid. The allocation of the equivalent 33 percent of undergraduate fee increases for financial aid persisted, seemingly impervious to boom-and-bust cycles.

Until now. This year’s decline in return-to-aid ratio from 33 to 20 percent was a historic first. The seemingly inviolable practice of taking one-third of every fee increase and earmarking it for financial aid was violated.

“It’s a major setback for California, and for the University,” says Joseph Watson, UCSD vice chancellor for student affairs. “The weakening of financial aid won’t have an immediate impact on our enrollment numbers, but it will have an impact on how students spend their time. There will be a degradation in the quality of the undergraduate experience,” he warned.

When Jennifer Pae was a freshman, her financial aid package consisted of loans, scholarships and grants. Today, laments the AS president, “an aid package is purely loans. If this budget had been in place four years ago, I would have found it difficult to come here. I would have carefully considered my options, to see if I could get a better deal with more financial support at a private university.”

Pae, a first-generation college student, does not receive financial help from her family. She is supplementing her $100 AS weekly stipend and $5,500 Cal Grant with private loans and she knows it is not just the fee increases that put a squeeze on needy students. “UC schools are located in some of the most expensive areas in the state,” Pae points out. A single room in the La Jolla area, including utilities, rents for $500 to $900.

Financial concerns are rampant, not just among poorer families but also the middle class. “College-bound high school students are more panicky than ever before and parents are more aware of the sense of urgency,” says financial planner Deborah Fox, of Fox College Funding in San Diego. She is seeing a greater willingness to opt for two years at a community college as a cost-saving measure. Her unwavering advice is: “Don’t wait till your senior year in high school to begin the planning process.”

Christopher Anoc, a third-year student, receives some tuition help from his family. His mother is a nurse, his father is a chemist, and his younger brother attends a pricey private school. As a freshman, Anoc qualified for a $3,000 grant. In year two, his aid package included a $2,500 grant and $1,000 in work-study money. This year, the grant is $180. Anoc, an engineering student, plans to make up the difference by working 20 or more hours a week at an off-campus job. “My schedule will be a lot more hectic and accessibility to campus will be difficult, since I don’t drive to school,” he says.

This is precisely the sort of situation that worries Watson. “We want our students to engage in academic programs and opportunities that make them highly competitive candidates for admission to selective graduate and professional schools,” he explains. “That requires time and energy devoted to coursework and enrichment activities, such as undergraduate research.”

In addition to threatening academic aid for students, the shrinking budget is causing conflicts between the undergraduate and graduate sides of the house. This academic year, for instance, to help some graduate departments retain their teaching and research assistants, UC breached the traditional firewall between graduate and undergraduate financial aid. “A portion of the funds to pay graduate assistants is coming out of what would have been used to fund undergraduate grants,” says De Anda, UCSD’s director of student financial services.

Typically, graduate financial aid is merit-based, while undergraduate financial aid is needs-based. Calling the shattered firewall “a big mistake,” Watson notes: “Undergraduate financial aid is designed to benefit the people of California and not the University per se. You cannot place an insurmountable financial burden on the neediest families.”

***

As a public university and prominent research institution, UCSD walks a financial tightrope between equity and excellence. Equity amounts to affordability and guaranteed access for academically qualified low- and middle-income students. Excellence, however, precludes a low-cost education product. The University regularly competes with private schools for faculty, students and research money.
“The gap between private and public universities is getting larger,” says Kissler, UC’s assistant vice president for budget planning. “Private schools have been picking up talent from public schools—and raising their tuition faster than public schools could.”

In response to dwindling state funds, UCLA Chancellor Albert Carnesale is floating a trial balloon that would dramatically increase both tuition and available financial aid at a few of UC’s more prestigious campuses. It is a solution that could have merit, reckons UCSD economics professor Julian Betts, provided you use well over 50 percent of the fee hikes to aggressively expand needs-based scholarships. “It’s price discrimination, it’s what private corporations do, and it could work for education,” he suggests. “You segment the market and charge different prices to different people.”
Another approach might be to penalize students who take too many years to graduate and thus help speed up the pipeline. Betts rejects this sausage-factory-style argument. “Universities give people a chance to experiment and see where their interests and innate abilities truly lie,” he says. “There’s something to be said for spending a couple of quarters shopping around.”

Pushing a four-years-and-out regimen would hurt some disadvantaged students, thinks graduating senior Perse Hooper, who works at the Office of Academic Support & Instructional Services (OASIS), a campus-tutoring program. “UCSD is a hard school, and so different from high school. If it takes a student more than four years to be academically successful, that should be okay,” she says.

Hooper, a single mother and Native American, is the first member of her family to attend a four-year college. She finds that some students benefit by taking three courses rather than the typically recommended four in their first academic quarter. “If you overload students and they have a bad academic start, it affects retention,” she warns.

Meanwhile, the need for private aid is greater than ever. For the past decade, the UCSD Alumni Association has awarded four-year merit scholarships to top-achieving high school students. This year, the Association added a needs-based Alumni Leadership Scholarship program for upper-division undergraduate UCSD students. The new two-year, $2,000-a-year scholarship is roughly the equivalent of 200 hours of work-study. “We will continue to award merit scholarships, but we also want to help students who are already here and alleviate some of their financial burden,” says Alumni Association executive director John Valva.

Applicants must have at least a 3.0 GPA to qualify for the Alumni Leadership Scholarship. “We want to award students who have financial need and are the superstars on this campus,” explains Valva. “They deserve that additional support so they can continue to perform those leadership roles.”

Compared with Berkeley and UCLA, UCSD is at a disadvantage in recruiting top-drawer students. “We cannot fund them at the same level as those older campuses,” says Valva.

Meanwhile. In 2003, the income gap between college and non-college graduates was 62 percent, according to The College Board and it continues its relentless climb. If the doors of opportunity slam shut, education will not be the only resource at risk. The California dream of affordable education for all qualified residents was not just a dream: It was a promise. Former UC President Clark Kerr warned of the dangers of defaulting on that promise in his 1999 testimony before the Joint Committee to Develop a Master Plan for Education. “I think it’s a suicidal route for the State of California, and also for the United States, if we keep on losing ground,” he warned. “As goes education, so goes California.”

Sylvia Tiersten is a freelance writer based in San Diego.

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"Currently the UC system receives 3.5 percent of the general funds - compared with 7 percent in 1970."