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Officials say UC needs additional state funding to avoid tuition hike

By Emily Liu and Amanda Schallert

Nov. 6, 2014 12:19 p.m.

In a conference call Thursday, a University of California official said the state will have to approximately double its planned $119 million in additional contributions to the University to avoid a tuition increase in the next fiscal year.

Nathan Brostrom, chief financial officer of the UC, said every $20 million increase in state funding would be equivalent to about a 1 percent tuition increase avoided.

UC President Janet Napolitano and Brostrom took part in conference calls to answer questions from the media about the University’s proposed tuition policy.

At November’s UC Board of Regents meeting, officials are set to vote on a plan that would raise University tuition by up to 5 percent annually until 2019-2020.

Napolitano said she released the information about the policy to the press and students simultaneously Wednesday night.

She said she thinks students have had ample time to respond to the proposed policy because she has been saying for months that tuition hikes will be on the table.

Though Gov. Jerry Brown’s multi-year funding agreement has given the UC a state funding increase of 4 to 5 percent per year since 2013, the University has said it needs more state funding to address rising costs from inflation and deferred maintenance projects, among other areas.

According to the plan, a maximum 5 percent increase in tuition will translate to an about $600 increase for California residents. The exact increase will change from year to year, depending on the expected state funding and cost changes for the University, Brostrom said.

The main purpose of the stabilization plan is to allow students, families and campuses to better plan and prepare for future higher education costs, Brostrom said.

“If you’ve been a UC student in the last 20 years, your tuition could have been flat or it could’ve doubled through no action of your own, and we want to prevent that from happening,” Brostrom said.

According to the University’s proposal, a 4 percent increase in state funding for the UC means a 1.7 percent increase in the UC’s educational budget.

Brostrom said there is currently no official agreement between the state and the UC on the proposed tuition policy.

Under Proposition 30, state contributions to the UC have increased in the past few years, though Brostrom said he thinks the increase is not enough. Last year, Proposition 30 raised state revenues by 8.5 percent, but state contributions to the UC only increased by 5 percent.

“The notion that Proposition 30 really helped higher education is not true,” Brostrom said.

The University expects up to $390 million in cost increases for the next fiscal year, even though about $119 million in additional state funding is expected, under the multi-year agreement. The cost increases will also go toward increasing faculty pay to make the UC more competitive for future faculty, as their wages remain lower than at other comparative institutions.

“At a certain point you can’t cut your way to excellence, and you have to say what does it really take to run a university of this caliber,” Napolitano said.

The UC has planned to save about $500 million in administrative costs from 2010 to 2015, but the University said it’s not enough to meet growing costs.

The money from the state would go to each of the UC campuses to spend on their specific needs, Brostrom said. The chancellors would choose how each university spends its money and would then report back to the UC on their financial decisions, Napolitano said.

“The chancellors know that the new tuition dollars are by and large designed to go into the student experience,” Napolitano said.

The UC is not spelling out exactly how the money from the state will be spent because each campus’s chancellor may use it differently, Brostrom said.

For example, UC Riverside may hire more faculty members to improve its faculty-to-student ratio, while other campuses may choose to invest more in graduate student support or classroom technology, he said.

If the state does not provide the money, Brostrom said the UC would consider increasing the number of out-of-state students enrolled at the University or tweaking its financial aid.

“There are other levers we can pull, things we don’t want to do that are detrimental to our stakeholders,” he said. “These are things we would have to consider if the governor did zero out our funding.”

Students with financial aid can expect no changes to coverage, though there may be the usual cost increases in room and board, Brostrom said. About a third of the tuition increase would go to supporting financial aid coverage, offsetting the effects of the tuition hike.

Under current financial aid funding, 55 percent of in-state undergraduate students pay no tuition, and another 14 percent are partially covered.

Even with a tuition increase, Brostrom said he thinks the UC remains one of the most cost-competitive universities in the country. Only about 31 percent of in-state students currently pay full tuition.

In the long run, Napolitano said she doesn’t see a tuition rollback as a likely event.

“No student likes to pay tuition,” she said. “But students want a quality degree, they want to graduate in four to five years with the classes they want to take. … Those are things that don’t come for free. The only way those could come for free is if the state dramatically increases (its support for the UC).”

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