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UCLA Anderson School of Management would gain by flying solo

UCLA’s Anderson School of Management recently curtailed its efforts in creating a self-supporting MBA program. The proposal was rejected by the Coordinating Committee on Graduate Affairs.

By Eitan Arom

Sept. 17, 2012 8:24 a.m.

The UCLA Anderson School of Management’s bold push for independence is in danger of being strangled in a noose of red tape.

The school’s proposal for a self-supported Masters of Business Administration program was tabled on Aug. 31, when it was rejected unanimously by the Coordinating Committee on Graduate Affairs, a committee of the University of California Academic Senate.

In a memo to Anderson Dean Judy Olian, the committee ruled that the full-time MBA program did not meet criteria set by UC President Mark Yudof for programs to become self-supporting.

Technically, the committee is correct. But with the financial future of UCLA’s top-rate business school in the balance, technically correct just doesn’t cut it.

In a policy statement issued last September, Yudof mandated that for a program to be independent of state support it must be in some way non-traditional in its constituency, schedule, location or medium. Anderson, the committee ruled, does not fulfill any of these characteristics.

The current guidelines are hobbled by the fact that no criteria exist for transferring an existing, state-supported program to self-supporting status.

So, after months of pushing its way up the UC bureaucracy toward the precipitous heights of the UC Office of the President, Anderson’s proposal was axed on a technicality.

The committee admittedly poked some sizable holes in the Anderson proposal, going so far as to say that in the memo it “is dismayed that (Anderson) considers freedom from direct Regental oversight an important advantage.”

This type of thinking imagines Anderson as casting itself off from the sinking ship of the UC to brave the choppy economic waters on its own. But sinking as it is, off-loading some weight might not be such a bad thing for the proverbial UC mother ship.

There is little reason why independence would not be an advantage, just as California’s independence from the federal government confers concrete benefits.

Indeed, other state universities do just fine with a structure similar to Anderson’s proposed self-supported model.

The budget model at the University of Michigan Ross School of Business, for example, includes no substantial direct funding from the state, and yet the school feels very much a part of the university, said Ross Chief Financial Officer Sean O’Neil.

In fact, O’Neil said that all professional schools in the University of Michigan system are funded in a similar manner.

So if Anderson thinks it can navigate economic waters better on its own, why not let it try?

The reason, in a word, is tuition.

There is little doubt that the issue of fee increases is an important one. Erik Heiberg, a student at Anderson’s Executive MBA program, said he feels business schools are in danger of pricing themselves out of the market.

“I think Anderson is smart enough not to raise their fees. Business schools in general are at their limit,” he said.

In fact, the proposal promises that Anderson’s commitment to increasing financial aid will result in “a significant reduction in aggregate fees paid by our students” but the committee that rejected the proposal was dubious of the claim, citing “misleading information.”

The question thus boils down to whether Anderson can keep fees lower in the long run under a self-supporting regime.

As an independent program, Anderson would forgo $6.9 million in funding while purportedly maintaining a steady level of quality. It is hard to imagine in this scenario that tuition would not rise.

Yet these modest tuition hikes would pale in comparison to the UC’s recent track record of double-digit fee increases.

To illustrate, the UC Board of Regents announced in July that it will consider a 20.3 percent increase in tuition if Gov. Jerry Brown’s tax initiative fails to pass this November.

As of 2010, Anderson received only 6 percent of its budget from the state. If that number were to drop to zero, the business school would be completely detached from the political and economic fortunes of the state.

Perhaps the most valid argument for Anderson to go solo, then, is that financial independence equals financial stability.

In fact, seeing as the proposal provides for a three-year trial run, the back-and-forth debate about tuition is largely moot.

If tuition balloons as soon as Anderson goes independent, the UC has the option of bringing the business school under its wing.

The next step in the years of bureaucratic wrangling that has surrounded Anderson’s effort for independence is for Yudof to create new guidelines for self-supported programs.

But as long as independence furthers the interest of the students, the MBA program and the UC as a whole, no guidelines should be necessary.

The ball is in Yudof’s court, and he should move in a way that streamlines Anderson’s long-standing push for independence. It would be a shame to needlessly bridle the enterprising and innovating spirit at Anderson with policy and bureaucracy.

Unless anybody on the inside can come with a better idea, the UC has no grounds to tell Anderson it can’t jump ship.

Think Anderson should rock the boat? Email Arom at [email protected]. Send general comments to [email protected] or tweet us @DBOpinion.

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Eitan Arom
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