11/20/2009 03:54 pm ET | Updated May 25, 2011

University of California: Where Students Pay More For Less

Chaos descended upon the University of California campus this week when thousands of student protesters faced off against armed police after UC's Board of Regents approved a 32 percent increase in student fees, and also a 15 percent midyear tuition hike (it's still unclear if raising tuition midyear is legal). The vote will bring the total cost of a UC education to more than $10,000 per year for the first time ever.

Fifty-two students were arrested at UC Davis when they refused to leave the administration building. There were reports of at least one student being tasered by an officer (some sources report two students were tasered).

Some footage of the protests:

I interviewed Bob Samuels, the president of the University of California, American Federation of Teachers, and blogger at Changing Universities, about the protests. Samuels fears the tuition hikes will prevent low-income youth from attending UC.

"Every other time, as far as I know, that [tuition has been increased] like in the case of Michigan, that has been precisely the result. They end up with mostly upper class, and middle class students," says Samuels. (Students in Michigan also have a rich history of protesting their government for more funding and lower tuition.)

Samuels has two main concerns: privatization and allocation. When Samuels spoke to Democracy Now today, he explained:

[W]hat happened about 1980 was that states started to cut their funding of higher education, and so universities looked for other ways of making money, and so they concentrated on raising funds and doing research, and especially research funded by corporations and the federal government. And so, basically now at a lot of universities, instruction only represents about ten percent of the budget, and so it's a minor aspect of the universities.

Samuels says that universities have become fronts for investment banks because the regents, the main financial overseers at UC -- appointed by the governor for twelve-year terms -- are mostly Republicans. Samuels accuses these Republicans of voting against taxes and attempting to defund higher education. The people in charge, says Samuels, are real estate people and investment bankers. For example, the new chair of the UC Regents, Russell Gould, is the former head of Wachovia, one of the financial firms that sold subprime student loans.

These regents pushed UC into investing heavily in mortgage-backed securities and real estate right when those were tanking, which brings us to Samuels' second grievance: the way UC spends its money.

UC lost over $23 billion in investments in the last two years, says Samuels. One reason why it lost so much money is that it invested heavily in toxic assets and in real estate by following the Yale model of investing in high-risk assets. Because they're losing so much money from financial hair-brained schemes, universities (especially the private universities) across the country are having to raise tuition, while cutting classes, faculty, and non-tenure track faculty.

This is especially devastating for UC where the non-tenure track faculty teach over 50 percent of the classes. In addition to firing faculty, Samuel says UC administration continues to reduce the salaries of workers, while increasing their workload. At the same time, they're refusing to negotiate with the unions.

With classes being cancelled left and right, and less faculty available to teach classes, it will take students longer to get a degree. As Samuels puts it, the students are now "paying more for less."

Samuels explains how UC's President Mark Yudof claims the school has to make all of these sacrifices because of state cuts to the UC budget. However, as Samuel points out, it's actually been a record year of revenue for the UC system because of federal stimulus money (at UC Davis alone, faculty garnered 88 research grants totaling nearly $32.6 million).

In fact, support from these external sources has steadily climbed from just under $300 million in 2000-01 to just under $600 million for the 2007-08 fiscal year, according to Liese Greensfelder of the UC Davis News Service.

In reality, UC had a record year in medical profits, and most of their money is brought in by selling parking, housing and medical services throughout California. Another telling moment, according to Samuels, came after UC's budget was cut by the state when UC turned around and lent $200 million to the state. Naturally, people wanted to know how UC could afford to lend $200 million to the state while simultaneously handing out faculty furloughs, tuition hikes, and slashing classes.

Yudof responded that when UC lends money to the state, the university makes a profit from interest. But when the school spends money on teachers' salaries, that money just disappears. Basically, "instruction is a losing proposition, and the university should just try to get out of the business of basically teaching students and hiring faculty," Samuel told DN.

Yet Yudof and Company continue to say the university is broke, and that's been the cover for laying off hundreds of faculty members, especially the non-tenured lecturers, and increasing class sizes. The UC administration is proposing really radical changes like eliminating minors and majors, and moving classes online -- all in the name of saving cash. And yet, there is little discussion about how (and where) the university spends its money.

UC has been at the center of several compensation scandals where the administration -- in the same meetings when it decides to increase student tuition -- votes on millions of dollars of increased salaries and special bonuses to administrators, athletic coaches, and some of its star faculty. The result is, according to Samuels, "that money continually floats to the top of the university."

At a time when faculty are losing their jobs and students can't afford to attend school, USA Today reports at least twenty-five college head football coaches make $2 million or more this season, slightly more than double the number two years ago. The athletics department at UC is no exception. Ironically, most athletic departments lose money, Samuels tells me, and yet UC Berkeley had been subsidizing athletics with student fees to the tune of $3 million to $4 million a year. (The UC Berkeley faculty last week voted to finally stop subsidizing the athletic department.)

Samuels accuses President Yudof of blaming the state for everything, while he tries to privatize the university. "The state only funds about 15 percent of the total UC budget, so we don't think the state is the major part of the problem." The big danger here, as Samuels sees it, is the privatization of education and the shifting of money and access to the top, while the poor majority gets left behind.

Cross-posted from Allison Kilkenny's blog. Also available on Facebook and Twitter.