My Governor is getting ready to launch a high stakes field experiment. While this could yield a QJE publication for him, it could seriously injure the quality of education at UCLA and UC Berkeley. He is mandating that the University of California will receive more public cash but he is demanding a tuition freeze for several years and he wants a sharp slowdown in enrolling out of state students.
During this time of stress for the 99%, it is certainly laudable to consider making California's elite public universities more affordable but does the strings he has attached pose a threat to maintaining long run excellence at UC's best campuses?
While economists always focus on tradeoffs, there is the implicit belief in Sacramento and in some of Dean's Suites that the University of California can remain excellent and cheap (relative to Ivy League tuition). This "free lunch" notion is foreign to me. President Obama's new health law is going to suck up a huge number of dollars for the UC's teaching hospitals. I predict that these teaching hospitals will be running huge deficits soon. How will the UC finance this? I don't think there has been a serious analysis of what the UC's finances will look like once the health law is fully implemented. As a great man once said to me; "Hell University has two Medical Schools!".
Faculty salaries and benefits are the major expenditure item at the UC. To reduce cost and increase "affordability" means hiring fewer faculty and fewer expensive faculty. In the short run, this is "wise" in terms of containing costs but in the medium term --- this starts the death spiral. In an age of no mandatory retirement, the UC faculty will become even older. I plan to retire at age 60 and I would like to see more UC faculty join me in this pledge.
UPDATE: Take a look at these demographics data about the UC in 1990 vs. 2011.
In 1991, only 15% of the total faculty were over age 60. In 2011, this share has grown to 28%. The share over age 65 has grown from 5% to 15% between 1991 and 2011.
