Rethinking Higher Education in California

By Dr. Daniel M. Estrada

collegestudents

Introduction:

California’s 1960 Higher Education Master Plan was visionary. The plan offered a tuition free college education through a three tiered structure of community colleges, California State Universities (CSU) and the University of California (UC) system. Universal access was possible with a high school diploma or equivalent through this three tier structure of universities.

In the 1960s, children, born after World War II (baby boomers), were college age. This group is a bulge in the state’s population pyramid. California’s economy experienced changes, from agriculture and oil extraction as an economic engine, to an information age of high tech industries and professional workers in: medicine, law, accounting, engineering, agriculture and education. This state is uniquely known for its multi-sector knowledge based economy – from Hollywood to the Silicon Valley. College educated workers fuel the economy; industries locate here for this reason. After the 1950s, decades of economic and social changes transformed California’s quality of life and demography.

Today, CSUs award 46% of Bachelors and 32% of Masters degrees in the state. CSUs, now an economic engine, support the state’s economy. CSUs’ 23 campuses employ tens of thousands of workers; as wage earners and consumers they provide tax revenues. ICF International reported that: every state dollar invested in the CSU generated $5.43 more. When calculating CSU graduates’ earnings, this investment rises to $23 for every invested state dollar. Other CSU achievements are a better quality of life and the political development of new arrivals.

California has a large and growing Latino population. Also, Latinos are young in a country facing a population decline. Aging baby boomers are a cause of this decline. A flow of immigrants has prevented a population decline in the US. Immigrants contribute to the economy while supporting Social Security and other entitlements for the state’s retired.

Whether it is first or second generation immigrants, a college education provides socialization for effective participation in state political, economic and social institutions. Meanwhile, the failure of education for these immigrants leads to marginalization from the same institutions. Marginalization of immigrants and migrants is associated with neighborhood crime and gang activity. Another consequence of this marginalization is informal market growth. The informal market includes drugs, and prostitution among other activities. Higher education investment has gains while divestment has economic and social costs.

California’s 1960 Master Plan for Higher Education, a great idea, was not sustainable! Lack of sustainability has hurt the state’s college eligible students. Currently, California’s long term challenge, is how can its public universities be sustainable and affordable for all residents?

“Access Denied”:

A consequence of California’s Higher Education Master Plan’s lack of sustainability, is CSU impaction and the lack of a clear pathway to CSU and UC campuses. CSU impaction occurs when academic departments and/or a CSU campus decides that the demand for a particular major is greater than the resources provided to the academic department or CSU campus. Impaction alternatives are to be attempted before impaction is declared. However, in the CSU system, almost all 23 campuses have impacted undergraduate programs. Six campuses’ academic programs are all impacted. In Southern California three of the six CSU campuses, having all academic programs impacted, include: CSU Long Beach, CSU Fullerton and San Diego State University. Fresno State and Cal. Poly, San Luis Obispo in Central California and San Jose State in Northern California are the other three impacted campuses. Impacted campuses may mean that Latino students must go to a private university if they cannot enter a their preferred program in a state university or UC campus. This puts a greater financial burden on Latino low income and first generation college students. Another option is a California Community College. However, some community colleges cannot accommodate the current flood of students and provide classes that they need for their degrees. The possibility of transferring from a community college to a CSU or UC campus has also become more difficult as a more limited number of available seats and rising tuition at the UC and CSU increase.

CSU impaction alternatives are: satellite campuses, year round classes and internet classes. Satellite campuses and internet classes address the limited CSU space issues. Students also need greater access to classes required for their degrees and graduation requirements. Summer school, and internet classes, help in reducing time required to complete a degree by offering more classes available during an academic year. However, critics of these ideas have warned about hurting academic quality.

CSU administrators claim that impaction is a budget problem. But, impaction is more complicated than just money. The CSU has one of the lowest graduation rates in the US. Therefore, the CSU Chancellor’s Office has developed a plan to address this problem – “The CSU Graduation Initiative, 2025.” Transition and bridge programs are being developed to help low income and first generation college students to attend a CSU campus. Transition programs allow high school students to take college classes concurrently. Community college students, in a transition program, may take upper division classes before transferring to a four year university, in order to increase their chances to graduate in two to three years or less. The graduation initiative’s goal is to improve graduation rates and thereby increase seats available to incoming high school graduates and college transfers.

CSU Economic Impact:

The CSU’s economic impact is described as two types according to the ICF International Report: “Working for California: The Impact of CSU System.” The first impact is CSU related expenditures and the second is created by CSU alumni earnings attributed to their degrees. The first impact is CSU related expenditures for wages and salaries; capital equipment, and supplies. Also there is student spending on meals, textbooks, and housing as well as an array of items related to the mission of the college. In the 2008-09 academic year this totaled $7.96 billion. But, the full economic impact of this $7.96 billion of direct CSU-related expenditures is estimated at $17 billion.

CSU-related expenditures do not describe the entire CSU mission which is to provide an affordable and accessible quality education to hundreds of thousands of Californians. When alumni obtain their degrees, the state’s investment rises to $23 for every $1 spent. CSU degrees support workforce needs of many information based industries. These industries include: agriculture, business and professional services, life science and biomedicine, tourism, engineering and information sciences, media, culture and design.   In addition CSUs educate workers in the public and non-profit sector. The public sector workforce includes: educators, social workers, peace officers, and public administrators.

CSUs’ greatest contribution to the state’s workforce is graduating more than half the state’s students in the fields of agriculture (62%), business (54%) and hospitality/tourism (64%). Also, the CSU graduates almost half the students in the state in engineering (45%) and careers in Media, Culture and Design (44%).

Regionally, business firms such as: information technology and electronics are found in specific areas of California. The Bay area’s Silicon Valley is famous as the birthplace of dozens of the world’s premier technology firms and the hub of technology entrepreneurship. Other fields like aerospace engineering in Southern California and telecommunications in San Diego represent high-tech industrial hubs. About 750,000 programmers, engineers, and technicians work in these industries.

Nearly every region in the state, except Los Angeles, has specialties in the agriculture, food and beverages sector. More than 200,000 of California’s agricultural employees provide a significant portion of the nation’s produce and represent the center of American winemaking. Also, life sciences is becoming increasingly significant. California has been a leader in research in pharmaceuticals, healthcare and biotechnology. More than 100,000 people are employed in pure life sciences production and research, with an additional 1 million working in healthcare.

Los Angeles is known as one of the world’s largest entertainment centers as well as a nexus for film, fashion, publishing, television and music. Thousands of artists, writers, and musicians are attracted to this area. Los Angeles as well as many other areas of California attracts tourists throughout the world to the state’s beaches, parks, restaurants and hotels. CSUs also provide skilled workers in the hotel and tourism industry also.

Firms specializing in business and professional services are found statewide. But, they are concentrated in Los Angeles, San Diego and the Bay area. These services are important to marketing, advising and improving the state’s businesses through management consulting.

Public sector jobs cannot be overlooked. This area includes both jobs in the government and non-profit organizations. These workers include: educators, law enforcement personnel, social workers and local, county, state and federal administrators as well as administrators of non-profit groups. California’s governance relies on trained policy professionals. As the most populous state in the country and one of the world’s 8th largest economies, California relies on competent policymakers. A majority of these people were educated in the CSU.

UC Economic Impact:

The UC generates about 46.3 billion in economic activity in California and contributes 32.8 billion to the gross state product. Every dollar, that California taxpayers invest in the UC and its students, results in $9.80 in the gross state product and $13.80 in economic output. UC operations and spending by faculty, staff, students and retirees support one out of every 46 jobs in California. By itself the UC employs over 190,000 faculty, researchers, staff and students at 10 campus locations, five health centers, a Department of Energy Laboratory and other facilities throughout the state. The UC also attracts significant spending of out-of-state money into California. This is estimated to be about $8.5 billion in 2009-10. Of course this money magnifies the impact of the UC in California. Five UC health centers account for a relatively high proportion of the UC’s economic impact in the state. The health centers are about 28% of the UC’s total employment and 38% of its contribution to the state economy.

Every dollar cut from the state’s support of the UC would result in a direct loss of about $2.10 in the state’s economic output, $1.30 in employee compensation, and $1.60 in the gross state product. In addition, there are potential or negative secondary impacts associated with a decline in the scale and quality of the UC’s academic and research programs.

California Workforce Needs:

As noted earlier, California’s economy requires highly skilled and educated workers. Reports, from the Public Policy Institute of California (PPIC), note that economic projections suggest that the state will continue to need greater numbers of highly educated workers.   In 2030, if current trends continue, 38% of the state’s jobs will demand at least a bachelor’s degree. However, population and education trends suggest that only 33% of working-age adults in California will have bachelor’s degrees by 2030. The shortfall would be 1.1 million college graduates.

California has a demand for skilled labor that it must act on now. Without an improvement in educational access and outcomes, California’s economy will be less productive, incomes and tax revenue will be lower. Meanwhile more Californians will depend on the social safety net. Statewide goals for higher education must be set to close this gap in the need for skilled labor.

CSU/UC Political & Social Impact:

CSU impact reports acknowledge that many elected state and local representatives are products of their university system. The quality of the state’s political leadership not only affects political institutions but social and economic institutions as well. California faces serious challenges with a changing demography, environmental issues, and keeping pace with a competitive world economy. Quality leadership is critical.

California gets its share of immigrants whether from Asia or Latin America. Many of these immigrants or their children are the first generation to attend a college or university. The CSU has more first generation college students than the UC system. A greater percentage of CSU campuses are Hispanic Serving Institutions (HSIs) than the UC campuses.

Organizations such as LULAC are aware of the critical role higher education plays in the incorporation of the state’s large Latino and Asian populations into the political and social economic institutions of the state. A report from the Tomas Rivera Policy Institute at the University of Southern California notes: “with the largest population of Latinos and Latinas in the nation – from undocumented to descendants of the first Mexican settlers – California is fast becoming a Latinized state.”   The Latino population in California has typically been marginalized in educational institutions as noted by low educational attainment rates; and marginalized from political institutions as observed by low voter turnout.   This exclusion continues into economic institutions as well, as demonstrated by low Latino family incomes. This is not a healthy scenario for California’s political and economic institutions.

A college education, as emphasized by the CSU and UC impact reports, changes the trajectory of one’s career.   Higher incomes, more taxes paid, greater consumption and economic output occur, versus participation in the informal economic sector.

Financing Higher Education:

As discussed earlier, California’s 1960 Master Plan for Higher Education received the attention of educators throughout the world. The three tier university and college systems support an economy that has placed California eighth in the world in economic productivity. Yet in most cases the twenty-three state universities and eight of the ten University of California campuses are without large endowments, making them seriously dependent on state and federal money for their budgets. With the more recent state divestment in higher education, California public universities have become more dependent on tuition increases to balance their budgets.

California’s economy has traditionally been boom or bust. State revenue has had surpluses in some years and deficits in others. This economic experience has forced the CSU and UC Systems to raise tuition on their students yearly and sometimes twice a year. For students in the CSU or UC systems the challenge to graduate in four years has become all the more difficult. With rising tuition, some students have to work which means they have to take fewer classes during a semester. In addition, CSU system efforts to improve graduation rates suffer set backs as a result of tuition hikes when students cannot cover their tuition with financial aid. If a student takes fewer classes and works to cover school expenses the likelihood of graduating in four years becomes impossible.

Another dilemma for state policy-makers is California’s higher education budget comes from the same general fund that pays for prisons and medical care for a growing senior population. New funding sources for higher education are needed. At this time California is the only state that does not have an oil extraction tax. Also, the growing number of mobile devices such as cell phones is another possible source of funds. Whatever the new higher education funding source, reinvestment in this area is necessary for economic growth and innovation.

One might ask, how can California stabilize its higher education budget? Governor Brown has proposed rainy day funds for critical state services but he has not described specifics for higher education. Coincidently, there have been legislative proposals for a higher education trust fund in California as far back as 1993. After the “Great Recession of 2007” higher education financing changed throughout the US. Most states paid at least half the operating budgets of public higher education. After the Great Recession, this amount dropped down to about one third of the operating costs. By the end of the Great Recession, the federal government was paying about a third of public university operating costs through dramatic increases in Pell Grants for tuition. Meanwhile, states were increasing tuition to cover the costs of their divestment in higher education.

States, including California, are slowly increasing support for higher education. But state higher education budgets in no way are approaching the support of pre 2007 levels.

Recommendations:

California is 48th in the country in the percent of college age youth attending a four year university. In addition, the state has fallen seriously behind in granting four year college degrees to meet demands of its economy. Goals need to be established to align institutions of higher education with state workforce needs. To achieve these goals a new master plan for higher education is critical. This plan needs to be sustainable which means policy-makers must rethink strategies to finance public higher education in this state. Several suggestions have already been made in this article such as: creating a higher education trust fund, accelerating the development of CSU and UC campus endowments, and building more partnerships with private and public corporations thereby expanding the resources of public universities. Ultimately, another source of funding must be sought for higher education as an alternative to the current general fund source.


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