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Monuments instead of Education

testosteronepit's picture




 

Wolf Richter   www.testosteronepit.com

Tuition for the fall semester at the California State University system will be double of what it was for the 2007-08 academic year—which should send leftover deflation mongers back to their burned-out calculators. But it's still not enough. Now CSU is threatening the beleaguered public, taxpayers, and prospective students with stunning enrollment cutbacks, unless—and this smells of extortion—it gets its favorite tax increases on the ballot and passed. CSU’s wealthy cousin, the University of California is also jacking up tuition and limiting enrollment. Budgets for the two systems were cut by $1.4 billion this year, and more budget cuts are expected unless tax hikes save the day. And yet, stunningly, a lavish multi-billion-dollar building boom continues on campuses around the state.

For the spring semester next year, CSU will not admit new students. Its perverse goal: cut enrollment from 417,000 students down to 400,000. To push this strategy further into the absurd, CSU may block even more students in order to bring enrollment down to 380,000 by the fall of 2013—if voters reject the tax increases that will be vying for their love and attention on the ballot.

Ironically, preventing willing and able buyers (students) from buying the ever more expensive product (education) won't save that much money: it shrinks revenues by the amount of tuition and fees that these students would have paid—though granted, in-state tuition doesn’t cover the whole cost. San Diego State University ran into this. After trimming its enrollment to save money last year, it couldn’t fill its dorms (duh!) and ended up closing an eleven-story building. Now it got smart. For this academic year, it required incoming freshmen from further way to live on campus, at a cost of $8,000 to nearly $14,000 for room and board, though they might have been able to bunk down for a lot less elsewhere.

And yet, despite the money crunch, enrollment cutbacks, layoffs, and vertigo-inducing tuition increases, the University of California is plowing a whopping $8.9 billion into 200 construction projects on 10 campuses. A jump of 75% from a decade ago, according to California Watch. And the ever short-changed CSU system is building as well, but on a more modest scale, $161 million, up 5.2% from a decade ago (graph). Perhaps on the theory that new buildings are more conducive to higher education than new students.

But new buildings aren't free. Maintenance is expensive; at CSU, the estimated cost of maintenance that has been deferred due to lack of money already exceeds $450 million. And the financing costs also eat into operating budgets, even if buildings are empty, as is a $36-million medical school building that UC Riverside can’t afford to operate.

Much of the money comes from construction bonds, which isn’t free money either, a surprise to some people. Interest payments—$1.1 billion per year—are part of operating budgets, along with maintenance, heating and cooling, and so on. Other construction funding comes from private donations and grants. And some comes from student fees.

But wait.... It’s not only crazy Californians. The construction boom is nationwide. “What you’ve seen in California you’ll see in other places, too,” said Mary Vosevich. She should know, as President-Elect of APPA, the national association of campus facilities administrators.

Some construction may be justified, particularly at crowded community colleges that are catching students who can’t get into the university system, or can’t afford the tuition. But, as California Watch says dryly, “Many new buildings are going up on campuses because financial donors want their names immortalized, university presidents like to leave legacies of brick and mortar, and admissions directors are battling for applicants they’re convinced are lured by shiny new amenities."

In a real-world business, this type of logic wouldn’t fly. Investments have to make sense on the bottom line. Alas, “There’s no bottom line in higher education,” said Richard Vedder, Director of the Center for College Affordability and Productivity.

So, thousands of students from all over California snarled traffic during their march on the Capitol in Sacramento. Hundreds flooded the Rotunda of the Capitol, a raucous affair—until the Highway Patrol cleared them out and threw 60 of them into the hoosegow. Their problem: tuition increases. For the debacle of a system that has become dysfunctional, and the nightmare that student loans have become nationwide, read.... Next: Bankruptcy for a Whole Generation.

 

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Wed, 03/21/2012 - 06:52 | 2276127 TheCanimal
TheCanimal's picture

What about the children?

Wed, 03/21/2012 - 06:39 | 2276116 gookempucky
gookempucky's picture

Had to green ya nmewn--- always thirsty.

BANKS disguised as education--just that simple.

Wed, 03/21/2012 - 06:24 | 2276100 nmewn
nmewn's picture

There will never be a time when the "educator" looks away from the victim, wipes the trickle of blood from the corner of his mouth and says I'm full.

Wed, 03/21/2012 - 06:08 | 2276093 Moe Howard
Moe Howard's picture

They build brick and mortar facilities while the system should be going to an online virtual model.

More proof they are institutions of idiots brainwashing new idiots. They have to remove them from the family to make the bullshit stick.

Wed, 03/21/2012 - 01:45 | 2275930 ebworthen
ebworthen's picture

Higher Affirmation...er...Education?

Bubble du jor, or should I say Bubble Part Deu for the Century, or is it number three?

Good thing the Government is now backing all the loans, with servicing by J.P. Morgue, just like the unemployment and EBT debit cards.

Mom and Dad and Grandma and Grandpa will pay with their house, or retirement, or garnished S.S. and Medicarve - ingenious, no?

Wed, 03/21/2012 - 01:29 | 2275911 AndrewCostello
AndrewCostello's picture

You can always tell the last few years of a civilization = whoever packs the biggest tantrum gets what they want.

 

http://www.amazon.com/Simple-Wealth-Mr-Andrew-Costello/dp/1463523017/ref

Wed, 03/21/2012 - 01:32 | 2275917 Vlad Tepid
Vlad Tepid's picture

Congrats on the publishing.  Your wife looks like a real peach.  Cheers.

Wed, 03/21/2012 - 01:29 | 2275910 Vlad Tepid
Vlad Tepid's picture

The only deflation going on is in student's IQ/SAT/attention span/thesis paper quality.  Surely this is great news for a "high tech workforce of the 21st century."

Tue, 03/20/2012 - 23:50 | 2275778 Stuck on Zero
Stuck on Zero's picture

Administrators.  The University of California is filling up with tens of thousands of bureaucrats and administrators.  They ahve taken over control and the faculty is taking second place.  They dictate everything to the acutal educators:  what you teach, when, where, how, and to whom.  The faculty complains that admissions sends them the worst students.  4.0 GPA geniuses are refused admission and the worst the state can produce is admitted.  It is all quite insane.

Tue, 03/20/2012 - 23:13 | 2275716 New American Re...
New American Revolution's picture

I'd say cut their budget more to reflect the reduction in students, fuck'em and their veiled extortion, because that is what it is.  Fuck'em, fire'em and bring in somebody else that can do the job.   If they can't, fuck'em, fire'em and bring someone else in, pretty soon, somebody will figure out a way.

Tue, 03/20/2012 - 23:12 | 2275714 the grateful un...
the grateful unemployed's picture

the question remains is the education worth it? what are doing in college, well i hope you're drinking beer with the Kerry's and Bush's, networking so you can get a high paying job after you graduate. well connected C students run the country, A students work for the C students. intelligent dropouts (one or two) form technology companies, but the other (3-99999) get their ideas bought out and are are left living on a small boat at age 40, thinking about how all the good stuff slipped away. nothing worse than being half of really intelligent. might as well be a lifelong civil servant. or a homeless bastard, at least your life and thoughts are your own.

Wed, 03/21/2012 - 01:17 | 2275896 Vlad Tepid
Vlad Tepid's picture

As a life-long civil servant (still not quite sure about how I ended up here, maybe because I was a B student), I think my friend who threw it all away and is now living on a small boat after having all his good ideas taken by more senior officers may have the better of it.  His goal is to become a homeless bastard for the very reasons you pointed out above. 

Tue, 03/20/2012 - 23:48 | 2275776 Cursive
Cursive's picture

@the grateful unemployed

Preach it!

Tue, 03/20/2012 - 22:24 | 2275619 libertus
libertus's picture

While buildings make up a big cost of higher education its the salaries that are driving prices. If you chart tuition rate increases and faculty dalaries and benefits you will see a pretty tight fit. If you don't believe me then look up the data yourself. Its all public information. 

You could also take a look at this article.

http://vermont.academia.edu/RobertSkiff/Papers/1296007/Blowing_the_Last_...

Wed, 03/21/2012 - 00:39 | 2275837 greensnacks
greensnacks's picture

They have something called a GSI, or general salary increase. It amounts to about a 2% annual salary increase. No matter how poorly one performs their job, they are given the GSI, as it is presented as a cost of living / inflation salary adjustment. However, this was discontinued in 2007 and hasn't been reinstated. State funding to the universities has been cut every year since 2007 and with fewer tax dollars supporting education, tuition goes up.

 

Work is being done, to combine duplicate resources across campuses, but there is a lot of fear the unions will squash any initiatives that will marginalize them. There is talk of a "virtual" campus or as many describe it, catching up with the university of phoenix a decade later. They could offer online courses for credit, while eliminating some of the classes. There is talk of ending whole programs. The CSU has 23 campuses. Do they all really need to offer masters in psychology? or could they take the best professors and send them to 3 campus, spread out across the state. Some of these discussions are taking place to deal with the budget problems and all involve combining resources to eliminate the head count or as they like to say, driving efficiencies and joining synergies. At least they are doing something, although probably a decade too late.

Tue, 03/20/2012 - 22:22 | 2275615 Dingleberry
Dingleberry's picture

I used to live in Cali until a few years back. For all his faults, Arnold tried to riegn in some spending with a few proposals, all of which were shot down.  They signed their own death warrant.  Fuck, I repeat....FUCK CALIFORNIA.  Those stupid imbeciles actually believe that they can promise everything to everyone, 6-figure public pensions, invite illegals en mass to work under the table, commit crimes and use ERs and send their anchor babies to public schools while living 20 to a house, take advantage of every decent taxpaying citizen that resides there (i.e. 10% sales tax, 10% state tax, extortion-type fees, borrowing like the Federal gov and masking how bad things really are)....and on and on and on. Cali used to justify high taxes with a return like cheap tuition and such. Time's up, fuckwads. You were warned.  Pay the piper. And prepare to pay a whole lot more. 

Wed, 03/21/2012 - 03:10 | 2275986 AnAnonymous
AnAnonymous's picture

More the result of Smithian economics than those stories.

California has been concentrating wealth and the result is life in California has been increasing expensive.

California runs in front of the rest of the US of A. It is time now to tell who belongs to California and who can afford living in CA.

CA middle class can no longer, either they leave, either they move to upper class or lower class.

Wed, 03/21/2012 - 11:22 | 2276692 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnAnonymous said:

California has been concentrating wealth and the result is life in California has been increasing expensive.

California runs in front of the rest of the US of A. It is time now to tell who belongs to California and who can afford living in CA.

CA middle class can no longer, either they leave, either they move to upper class or lower class.

So with no more middle class in CA, then no more US citizenism in CA?

 

Tue, 03/20/2012 - 23:03 | 2275692 the grateful un...
the grateful unemployed's picture

enjoy your new life in Alabama

Tue, 03/20/2012 - 22:17 | 2275608 HD
HD's picture

You don't need a piece of paper to start your own business or start at the bottom and work your way up. Kids don't know how to (what we in my youth called) hustle. A degree used to mean something - now it's just a ridiculously expensive prerequisite just to get an interview to be another easily replaceable worker drone.

Granted - you'll work harder and longer on your own...but what you build will be yours.

 

 

 

 

Wed, 03/21/2012 - 01:21 | 2275898 Vlad Tepid
Vlad Tepid's picture

I wish that American by-the-bootstraps small business story were still true.  Unfortunately I think it's very difficult to create value anymore as the little guy.  It's a fairytale, like social mobility in pre-revolutionary France.

Wed, 03/21/2012 - 03:16 | 2275991 AnAnonymous
AnAnonymous's picture

It's a fairytale, like social mobility in pre-revolutionary France.

------------------------------------------

It was class warfare revolution, led by middle class. The biggest hurdle to social mobility is the middle class as the middle class predates on the lower class to form itself while hoping to make it to the upper class.

So yes, starting from down is hard because you will have to go through the middle and the middle will push you back to keep you where they think you belong, their steeping stone to rise toward upper class.

Widely observed now. Middle class had no issue shipping away lower class jobs. It would help the world poor. But now that some countries like India, China, Russia, Eastern Europe, Brazil are ready to develop their own middle class, watch how the already established middle class is pushing them back, wanting to maintain them lower class.

In US citizenism, middle class is the king class.

Tue, 03/20/2012 - 22:10 | 2275598 jonjon831983
jonjon831983's picture

bluff... called.

Tue, 03/20/2012 - 22:07 | 2275583 Palladin
Palladin's picture

Everytime I hear about California State Salaries I get mad enough to chew Nuetronium.

While the UC system attempts to hold the students (customers) hostage, nowhere do you see anybody in the UC system thinking of a little suffering themselves. I put this table together a few years ago and it shows why California is going broke. People that work in the UC system make way too much money.

Here's a table for three years showing the top 300 or so earners.

https://docs.google.com/open?id=0B51-74tGswAXdzdLdkhWX21STktlYzJPdzBhNXdUUQ

I would have updated the table to include the current years, but they have changed the format, so it is more difficult to gather the data in bulk, so you will just have to settle for the 2007, 2008, 2009 data.

However, if you want to see more current data you can go to:

http://www.sfgate.com/cgi-bin/news/casalary/employee

or

http://www.sacbee.com/statepay/

and plug in names from the table to see what they are making today. I wonder how many of them are making less today than they were a few years ago?

Wed, 03/21/2012 - 06:07 | 2276092 Bringin It
Bringin It's picture

They will all get monster pensions as well.

Or at least they think they will.

 

Tue, 03/20/2012 - 21:59 | 2275574 greensnacks
greensnacks's picture

The quality of education in California just goes down, but at least it cost more! The students are getting screwed but I would argue that it is the State legislatures with empty coffers that are causing the tuition to rise. Funding has been slashed down to 1996 levels while loading up the campuses with 90,000 more students. It's not like they have many options and are being forced to come up with revenues through tuition hikes. Despite what the article says, they have delayed construction projects and can only delay them for so long, before buildings are condemned. I should know. I work in a building that has been scheduled for decommission at least 3 times now and is over 60 years old. Random ceiling tiles fall and the roof leaks when it rains, but at least they cleaned up most of the asbestos! The only way new buildings seem to go up, is if someone wants their name on it and is willing to fund a percentage of the costs.

Staff continue to be cut, or retire without the positions being filled, loading up work on existing employees. Less than 4% of full time employees at one college were under 30 years of age, while more than 55% were over 50 years of age. Talk about living in the past! Classes have been reduced, forcing students to wait for slots to become available in future semesters, meaning it takes them even longer to graduate. Incremental progress has been made to get class curriculum online but it is expensive and all the universities seemingly want to do it themselves. And to top it off, every 6 months the state governor comes back asking the universities make more cuts. So while costs are inflating and state funding deflating, the funding has to come from somewhere and less and less of it is coming from taxpayers.

Wed, 03/21/2012 - 01:25 | 2275903 Vlad Tepid
Vlad Tepid's picture

Your situation is not unique.  We're all in the same depression.  There are worse things than not having 20-something undergrad TAs to pat.

Tue, 03/20/2012 - 21:55 | 2275564 JohnKozac
JohnKozac's picture

mm, How about a new football stadium? ..and coach?

AUSTIN, Texas -- Texas coach Mack Brown is a $5 million man, not just this season, but for the life of his contract.

Easy to see what society values, and it ain;t education.

http://sports.espn.go.com/ncf/news/story?id=4728932

He makes almost as much as a banker.

Tue, 03/20/2012 - 22:56 | 2275673 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

As a UT alum, I am disgusted to the nth degree that Mack Brown makes the most of any college football coach and the Horns have been sucking it up for the last two years. Fire Mack Brown! Save money and get a real coach. Even better, eliminate the NCAA and focus on education.

Tue, 03/20/2012 - 23:42 | 2275767 Cursive
Cursive's picture

@Vampyroteuthis

You can have Les Miles if you promise to keep them both away from the state of Louisiana.  Oh, and fuck all colleges.  They only seem to exist to license their logos on crappy merchandise. 

Wed, 03/21/2012 - 01:27 | 2275907 Vlad Tepid
Vlad Tepid's picture

Are you saying my $25 "Go 'Zags" plate protector is cheaply made plastic Chinese crap?

Tue, 03/20/2012 - 21:45 | 2275541 non_anon
non_anon's picture

ponzi

Tue, 03/20/2012 - 20:56 | 2275428 steve from virginia
steve from virginia's picture

Tuition for the fall semester at the California State University system will be double of what it was for the 2007-08 academic year—which should send leftover deflation mongers back to their burned-out calculators.

I have some nice real estate for ya that has lost about half of its worth since 2005. The calculator works fine. It sez the lost money would have paid for a few law degrees from Harvard.

Everyone is waiting for growth to re-appear and make all of these distortions go away. $125/barrel Brent crude

$125/barrel is the spot price of Louisiana- and Gulf of Mexico crudes. Growth? Fugettaboutit.

Bear's mortgage security hedge funds crashed in the summer of 2007. Almost five whole years with no growth despite the injection of $2 trillion in (money) capital around the world and $8-10 trillion increase in central bank balance sheets. No growth, not even a chance. All the growth goes into the gas tank, into more roads and overpasses, into filling the endless potholes on the roads we have, toward building more 'big box' white elephants.

College is another racket that is in the process of falling apart. Once it becomes unaffordable the plug will be pulled. Once the kids get fed up they will walk away from their debts and give the banks the finger. That will be the end of the consumer lending business in the US as the educated have been the most dedicated of junk-buyers.

Coming to an end ... as all things must.

 

Tue, 03/20/2012 - 20:50 | 2275414 CapitalistRock
CapitalistRock's picture

California heavily subsidized education for decades. You can't possibly tell me with a straight face that you are naive enough to believe major price increases weren't coming. Expect more of this.

The problem isn't price increases, but that their massive budget was never funded by tuition.

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