Prospecting for Education

America’s academic towers were never all that ivory, but how much private funding should the nation’s top public university have to rely on?
By Reyhan Harmanci

For most Americans, California evokes images of beaches and palm trees, the Hollywood sign and the Golden Gate Bridge. People don’t hear “California” and automatically think, “The Higher-Education Capital of the World.” Yet the state’s commitment to higher education has been one of its greatest achievements. The three-tiered system, laid out so elegantly by educator Clark Kerr’s Master Plan in 1960, has been widely imitated across the nation and around the world. Led by a handful of esteemed campuses—Berkeley being the proverbial jewel in the crown—the UC system has unquestionably helped cement the state’s status as a world leader in public research and higher education.

Berkeley’s general excellence is built on a century-long investment. Long before Kerr made his historic proposal in the 1960s, California’s stake in higher education was the strongest in the country. According to John Aubry Douglass, Senior Research Fellow at the Center for Studies in Higher Education and author of The California Idea and American Higher Education, by 1920 the state had the first and largest network of junior colleges, the first multicampus university (with sites at Berkeley and Los Angeles) and the largest enrollment of any state system. It also was the first to receive research money from the state.

Even before the Master Plan, California had established a university governance system that sought to insulate academe from the vagaries of politics. The UC Board of Regents holds sway over the system as a whole, but faculties have enormous power on individual campuses via the Academic Senate. The Master Plan codified higher education as the right and responsibility of the State of California. It mandates that the 12.5 percent of highest-achieving California students be admitted to the UC system, guarantees college admission to every California high school graduate, and creates ease of movement from community colleges to universities.

Over the past two decades, however, declining state support, in conjunction with legislation that allows greater entrepreneurship at universities, has made the traditional model of the public research university untenable. We are in an age of “the hybrid university,” UC President Mark Yudof wrote in a 2002 essay. “For me, the unvarnished truth is that the extraordinary compact between state governments and their flagship universities appears to be dead—or at least on life support.” Kerr himself said as much before his death in 2003. “Our research universities are preeminent in the world, and one-half of all new research output is American in origin. And California leads the way within the United States,” said Kerr in a 1993 address in Sacramento, “Yet higher education in the United States and in California—particularly public higher education—is even more depressed than the economy…. When and where else in American history has such comparative great success ever been followed by such comparative deprivation?”

An aging population, a political climate that favors small government, and a more business-friendly academic culture have all conspired to make this a national trend. As cited by Yudof, the number of Americans between the ages of 45 and 65 grew by a third over the last decade, while between 1960 and the present, the number of households with children dropped from one-half to one-third. The move to privatize public schools has occurred in almost every state, as the proportion of spending on higher education fell 14 percent from 1986 to 1996.

The current state of general excellence at Berkeley is indisputable. It currently tops the U.S. News & World Report list of best public universities in the country—as it has for the better part of the last decade—and has more graduate programs ranked in the top ten than any other. The diminishing state support and the rise of other revenue sources affects every department and school differently, however. Professional schools like Haas Business School and Berkeley (Boalt) Law School have adapted more easily: Their alumni can afford to be more generous and the disciplines lend themselves more easily to corporate partnerships. Bio- and nanotechnology have been huge growth fields, as their applications are more commercial than basic research. The humanities have smaller budgets but are also less marketable—so they are more vulnerable to budget cuts.

The uneven allocation of resources across campus is itself a fundamental change. Harvard professor James Engell and co-author Anthony Dangerfield in their Saving Higher Education in the Age of Money, characterize this type of income stratification as an effect of the “market-model university,” privileging departments that make money, study money, or attract money.

The funding problem isn’t about Berkeley in isolation; it’s about Berkeley relative to private elite schools. Private institutional endowments have skyrocketed over the past ten years, thanks to savvy fundraising and good investments. Vice Chancellor-Administration Nathan Brostrom said that roughly $500 million in annual state funds is equivalent to the benefits of an $11 billion endowment. But in the early 1990s Harvard’s endowment grew well beyond that level. Berkeley’s endowment was $2.9 billion as of 2007; Harvard’s is $37 billion, Stanford’s $17 billion, and MIT has amassed $10 billion. “Our private peers have been growing at double-digit rates,” Brostrom said, referring to endowments. Berkeley faculty retention suffers as a result: Over the last few years Berkeley has lost 30 percent of the 236 faculty members recruited by outside institutions, which can offer salaries that are 10–40 percent higher than the $130,000 average for a full professor at Cal.

Even before pharmaceutical companies and Big Tobacco offered to sponsor studies, scientific research at universities was not free of outside support and influence. This is especially true in U.S. education, which, unlike the European ideal, has always had practical goals. The 1862 Morrill Act established public land-grant universities, such as Berkeley, “for the benefit of agriculture and the mechanic arts.” As Jennifer Washburn and Eyal Press reported in their March 2000 Atlantic Monthly article “The Kept University,” institutions have always been entangled with business interests: University of Minnesota once operated a mine, and New York University was gifted the profits of a macaroni factory.

It was pioneering science administrator Vannevar Bush, though, who pushed the direction of the modern research university into the military’s hands. He founded the National Defense Research Committee in 1940, which was subsumed by the Office of Scientific Research and Development a year later. Bush recognized the importance of basic university research for American military technology, and in 1950—the pre-Sputnik, postwar years—he directed the government to create the National Science Foundation, with the advice that “Scientific progress on a broad front results from the free play of free intellects, working on subjects of their own choice, in the manner dictated by their curiosity for exploration of the unknown.”

While free inquiry remained key to government policy, the Department of Defense didn’t spend hundreds of millions of dollars on university research without some strings attached. The term “Big Science” emerged to describe the rise of government-funded laboratories such as Lawrence Berkeley National Laboratory. Researchers routinely protested their participation in military research, just as some do for corporate-sponsored projects. A turning point for scientific research came in 1980, as the Cold War began to cool down. The Bayh-Dole Act allowed universities for the first time to profit from patents derived from federally funded research. Many heralded this as a welcome incentive for the public to benefit from research, but it also injected commerce into the academic aim. Soon after the restrictions were lifted, UC established a technology transfer office for generating patents and helping to funnel them into private enterprise. Since 1990, Berkeley Lab technology has been the basis for over 20 start-ups. Their research partnerships have totaled over $100 million dollars in the past ten years, making them one of the most successful tech transfer offices in the country.

For critics of applied research, increased tech-transfer activity means more potential for conflicts of interest and divided loyalties among university researchers, as well as delays in publishing. Professors can now serve not just as industry consultants, but as shareholders and employees of startups their research helped found. Berkeley’s strict conflict-of-interest rules protect institutional integrity, but each new partnership brings a new set of issues that requires a new set of rules.

In the 1998, 5-year, $25 million deal with Novartis, Berkeley allowed the corporation to fund basic research for Plant and Microbial Biology in exchange for first rights on new discoveries, becoming the first campus to allow industry to fund an entire department. Criticism erupted over proprietary rights given to Novartis and what was perceived as the subversion of academic freedom.

A year after the arrangement ended, a Michigan State University report, done at Berkeley’s request, recommended tougher standards and greater transparency in future corporate-university compacts. Yet when the dust settled, any advantage in the relationship went to Berkeley: It was left with proprietary plant databases while Novartis didn’t license a single thing.

The sheer scale of the agreement between BP and Berkeley, LBNL, and University of Illinois at Urbana-Champaign again raised concerns about the degree and nature of industry involvement in university research—the $500 million dollar biofuels contract is the largest alliance yet between a corporation and academe.

Funding for the humanities is a different story. Rather than corporations, they’re relying more on foundations and moneyed individuals. “The academic deans all have fundraising as part of their job,” Associate Vice Chancellor David Blinder notes, “and some do it with particular skill and enthusiasm.” Others do not. The resulting stratification means flashy new buildings for some departments, not for others. According to Berkeley’s University Relations office, of the $270 million in private donations raised across the campus during the 2006–07 fiscal year, $10 million came from Haas. Boalt law school, two years into a $125 million campaign, has raised $60 million. For contrast, note the $10,000 gift extolled on the Classics department website.

Blinder allows that there is “disproportionate” giving to the business and engineering schools, but insists that the general curriculum is not affected. “It’s the responsibility, from the provost on down, to make sure there is sufficient funding,” he says.

Even though Berkeley tries to share the wealth, inequities can surface. This summer, a crisis emerged when the Temporary Academic Staff (TAS) budget was cut, which would have been a particular blow to the English and East Asian Languages and Cultures Department: The TAS budget funded lecturers in East Asian Languages and graduate student teaching of the required Reading and Composition English course. East Asian Languages course offerings would have been gutted, losing 66 percent of its Korean classes and disrupting about 1,500 students. Not only would 17 English grad students out of 140 have seen their primary income evaporate, but English majors would have had to go outside Berkeley, to community college, to earn the necessary credits.

The situation naturally frustrated the affected parties. “The Bay Area and Los Angeles are some of the most affluent areas in the country,” says English Ph.D. candidate Charles Legere, “and you see the school naming new labs after donors and building skyscrapers on campus.” The shrinking public money, he says, “feels like an overall shift in priorities.” Thanks to noisy objection from those two departments, Berkeley moved to restore funding, “gathering,” said English department summer chair Mitch Breitwesser, “all the change it could scrounge up.” The department also benefited from a $113 million gift from the William and Flora Hewlett Foundation—the largest private donation in the school’s history. The donation is for 100 faculty chairs, 7 of which will go to the English Department.

Fundraising from individuals and nonprofits has its own pitfalls: For starters, there can be a mismatch between what donors want to fund and what the university needs. It’s often been noted that breaking ground on new buildings is more attractive to fundraisers than upkeep on existing structures, but both are needed.

One way to combat the loss of state money, of course, is to raise tuition. Undergraduates and graduate students alike are seeing fees rise. This year, undergraduate tuition was hiked 7.4 percent, to more than $8,000—after housing, books, and other expenses, the yearly cost of a UC undergraduate education is more than $20,000. During an editorial meeting with the San Francisco Chronicle, UC Provost Wyatt R. “Rory” Hume warned that a worsening economy could make midyear 2008 tuition raises possible. Graduate students face even higher charges: Last year the regents signed a three-year plan to increase fees at professional schools by 7–15 percent a year. At Berkeley’s business and law schools, annual fees are now $26,000 and $31,000 respectively. Professional schools such as Boalt and Haas, defend their tuition charges on the grounds that their graduates will command higher salaries after graduation—although a heavy load of student loans makes working for the less-lucrative public sector more difficult.

Making Berkeley less affordable for undergraduates hasn’t yet changed the socio-economic makeup of the student body, as it has at the University of Michigan where 51 percent of the students come from families making more than $100,000—but it does mean that poorer students are saddled with higher debt upon exit. In Generation Debt, author Anya Kamenetz notes that the annual volume of student loans tripled to $85 billion in 2005, and the average debt burden of a four-year student is greater than $20,000. At a public university like Berkeley, unlike at elite private schools—Stanford, for example, waives tuition for students with family incomes less than $100,000—there is very little money given away outright. Even if an education at Berkeley still costs less than at a private institution, the smaller endowment and financial aid structure are making the competition for elite students much tougher.

Nearly everyone does agree that there’s no going back to the old ways, in which the state, and by extension taxpayers, adequately funds higher education. Education for education’s sake suddenly seems like a quaint idea. Shifting demographics, economic uncertainty, and technological imperatives are making change necessary.

Berkeley has adapted as well as any to the changing rules of university funding. As the Department of Defense-funded research shows, the past was never an idyll of unfettered intellectual pursuits nor should it have been. “In relations with the private sector, Berkeley needs to say yes when it makes sense, but also say no,” says Douglass, rubbing his temple, “and to say no from a position of internal strength.” The Master Plan has written much of that strength into the UC system, but it’s unclear how much financial pressure a public research university can stand before its public mission is trumped by private concerns. One study on the prospect of privatizing UC concluded that building up the current endowment to Ivy League levels would take perhaps a century. Without help from the state, tuition can’t be kept low, donations can’t be properly vetted, corporate partnerships can’t get stringent oversight. In short, as the university’s financial foundation erodes, it will become harder and harder to say no.

And there may indeed be a future in which Berkeley receives no money at all from the state. Last fall, Democratic State Treasurer and Berkeley grad Bill Lockyer ’65 broached the subject of cutting the entire UC system loose. He’s probably not the first bureaucrat to reach for the red pen: The UC system costs the state almost $3 billion a year. His office was quick to say he wasn’t endorsing, but merely calling attention to the idea of privatization. In a later meeting he explained that the way the system is presently funded is “de facto privatization. If you’re going to run a private system, be honest about it.”

Lockyer’s rhetoric should serve as a wake-up call. With the U.S. economy teetering on the brink of recession or worse, Californians should think hard about how they can best protect what, in academe, are still regarded as among the very finest public universities in the world.

From the November December 2008 Stars of Berkeley issue of California.
Filed under: Law + Policy
Image source: Contemporary print from original negative by Ansel Adams, UR/California Museum of Photography, Sweeney/Rubin
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