On July 12th the California State University Trustees increased tuition by 12 percent for the fall term. This follows the 10 percent hike last year. Both tuition hikes are blamed on the $650 million in state budget cuts for the Cal State system. Undergraduate tuition at CSU goes up to $5,178 for fall 2011 or $948 more than it was in fall 2010.
But the budget cuts must not have hurt too badly since the trustees then approved the compensation package for the new university president at San Diego State, a part of the CSU system. The Trustees approved a $400,000 compensation package for Elliot Hirshman which was 33.6% HIGHER than his predecessor. Hirshman thus becomes the 29th officer of the Cal State system to make more than $240,000 according to the Sacramento Bee.
Governor Jerry Brown sent the trustees a nasty letter complaining about the size of the increase in salary and dissing them for setting a bad example for other public employees. Lt Governor Newsome, a member of the trustees voted against the increase and legislative leaders issued press statements with mildly masked threats of retaliation with even more cuts if he CSU trustees approved the package.
They did it anyway. Why?
The trustees argued that the market for university presidents is fiercely competitive and they must keep up or fall behind. And let’s face it, compared to corporate salaries for officers of organizations of similar size these salaries are not out of line for their level of responsibility.
But the problem is the universities want it both ways. They want to be subsidized by the tax payers arguing that the world class education for the next generation of leaders is at stake from persistent budget cuts. They want to protect their merit increases and bonuses and defined benefit pensions. We understand that since we all want the same thing.
But competition, the recession and a slow recovery forces business to make tough choices, rationalize costs, and scale back spending to reflect the realities of the economy we have. The universities hate doing that so they raise tuition and blame it on the State. The State complains as they are doing now but is secretly happy to see the tuition hikes because it enables the Governor and the Legislature to look good the next year by making more “cuts” in the university budgets. This is nothing more than a pseudo-tax increase on parents.
There is a solution for this!
IPO the California State University System and the University of California System, and free the universities to compete in the marketplace for students, research grants and faculty. The State can budget a fixed amount each year for grants to California higher education students for instruction and let them compete for a place in class. If they can’t find one in the CSU or UC system then the student and his parents can apply the grant to tuition at a private school or out of state.
No drama. No political games.
The universities are wealthy beyond measure in the creation of intellectual property and if they harnessed the patents and IP and encouraged the faculty to turn it into commercial, revenue producing products, services and expertise the endowment would grow and the faculty would get paid for the time they teach and be free to supplement that teaching stipend from their research work and consulting.
I suspect several things would happen. First, the attitude of the faculty would become much more entrepreneurial. Second, teaching would be a priority for those who choose to teach. Third, students would find many great learning opportunities from the start-ups and work experiences created from that research and entrepreneurship and find taking yoga or underwater basket weaving much less attractive. Fourth, tax revenue and state GDP would grow again as these incubators for learning got back to the business of teaching students what they need to know to be productive citizens.
There ends the rant.
- CSU tuition now twice 2007 cost (sfgate.com)
- Cal State board to vote on 12 percent tuition hike (seattletimes.nwsource.com)
As Jerry Brown prepares to take office as Governor, some of the highest paid officers and professors at the University of California are threatening to sue the State to allow them to spike their defined benefit pensions by adding bonus and other forms of “compensation” to the formula beyond the Federal IRS cap for doing so set at $245,000 in 2007. The IRS granted the UC system a waiver from the cap for these employees, but the university did not implement it because of its cost promising to do so at some unspecified future.
Now the professors, deans and other affected UC administrators sensing correctly that this gravy train was at serious risk want UC to make good on ‘the promise to allow them to accrue retirement benefits based on their full salaries, rather than at a federal cap set at $245,000.’
They complain that the current pension system sets benefits for retired employees who made $500,000 per year the same benefits as those who made $245,000 or $184,000. But the University says honoring the alleged promise would cost the university about $5.5 million a year, plus $51 million as a one-time catch-up to make the change retroactive to 2007.
Thirty-six employees of the 200 affected sent a letter to the UC Regents demanding action to ‘follow through on this promise’ according to a story by Matt Krupnick in the Contra Costa Times. Meanwhile, the University is under growing pressure to overhaul its under-funded pension plan which now has a $20 billion liability because the 20 years of underfunding.
Welcome to our world, professors!
When asked his comment on the letter sent to the regents Governor-elect Jerry Brown replied:
“These executives seem very out of touch at a time when the state is contemplating billions of dollars in reductions that will affect people who are far less advantaged.”
There was a very op-ed by K. Lloyd Billingsley of the Pacific Research Institute in the San Francisco Examiner on the backstory you won’t see in the new movie ‘Waiting for Superman’. Here is what he wrote:
‘Waiting for ‘Superman,’” touted by Oprah, Bill Gates and other celebrities, is now playing in California theatres. Academy Award winner Davis Guggenheim directed the film, best documentary at the Sundance Film Festival. Several back stories, and the star, will not be apparent on the big screen.
“Waiting for ‘Superman’” follows five children of different backgrounds as they try to gain admission to better-performing charter schools across the United States. That is hardly a common theme, even for a documentary. So how did the filmmakers get the idea?
The producer, it turns out, had read “Not as Good as You Think,” by Lance Izumi of the Pacific Research Institute, and saw the film based on the book. The theme here is that government-run schools in upscale neighborhoods may have impressive buildings but they are not delivering the goods in student achievement.
Not everyone loves the film. Michael Powell of the American Federation of Teachers told the Sacramento Bee that the documentaries “leave the impression that public school teachers are bad, that charter schools are a panacea and that teachers unions are responsible for failing schools.”
That impression actually has a lot of merit. Teacher unions are a huge part of the problem. AFT president Randi Weingarten told The Nation that “only 7 percent of American workers are in unions. America looks at us as islands of privilege.”
Teacher unions make it difficult to fire bad teachers, which has even caused President Barack Obama to speak out. He wants to tie teacher evaluations to student achievement, which teacher unions oppose. That comes as no surprise because teacher unions stridently oppose most education reform, including merit pay and charter schools.
Charter schools don’t have to maintain a closed union shop, and can choose teachers for ability, not seniority. In return for meeting their achievement goals, charters get freedom from many regulations. Not all charters excel, but enough are succeeding that parents nationwide want to get their children into such schools.
Meanwhile, the real star of “Waiting for ‘Superman’” is choice. That’s what empowers the parents and students to find better opportunities. But President Barack Obama is not willing to give it to them. Indeed, he quashed a popular and successful choice program for low-income students in the nation’s capital, a move teacher unions applauded. To expand opportunity, someone else needs to step up and show leadership.
The Beloit College Mindset List for the Class of 2014 is out and the answers are not good.
Students entering college this fall—the Class of 2014—were born in 1992. Since 1998, Beloit College has published the Beloit College Mindset List designed originally to caution the faculty on the use of dated references. It has since become a symbol of either the ‘cultural touchstones that shape the lives of students entering college this fall’ or a reminder of how much work these faculty have ahead of them to turn these mushy-brained students into productive adults. You decide.
Here is the Beloit College Mindset List for the Class of 2014:
1. “Few in the class know how to write in cursive.
2. Email is just too slow, and they seldom if ever use snail mail.
3. “Go West, Young College Grad” has always implied “and don’t stop until you get to Asia…and learn Chinese along the way.”
4. Al Gore has always been animated.
5. Los Angelenos have always been trying to get along.
6. Buffy has always been meeting her obligations to hunt down Lothos and the other blood-suckers at Hemery High.
7. “Caramel macchiato” and “venti half-caf vanilla latte” have always been street corner lingo.
8. With increasing numbers of ramps, Braille signs, and handicapped parking spaces, the world has always been trying harder to accommodate people with disabilities.
9. Had it remained operational, the villainous computer HAL could be their college classmate this fall, but they have a better chance of running into Miley Cyrus’s folks on Parents’ Weekend.
10. A quarter of the class has at least one immigrant parent, and the immigration debate is not a big priority…unless it involves “real” aliens from another planet.”
The Beloit Minset List goes on—and on at the website link above. I’ve had enough since this depresses me about the quality of education today and its implications for America’s competitive future unless we can teach these kids how to Tweet math or science formulae in TinyURLs.
Go home tonight and read to any of your children who will sit still long enough to listen!
The economic reports continue to trickle in and fears of a double dip recession are abating. Too bad it does not yet feel like recovery. Economists tell us that employment growth is typically a lagging indicator and so it is this time as well. There are enough data points for experts to characterize this recovery and compare it to past experience, and some things are different and worth noting.
The Good, the OK and the Still Ugly
The Conference Board Leading Economic Index (LEI) for the U.S. gained 1.4% in March, 0.4% in February, and 0.6%in January. The LEI rose at a 5.2% annual rate between September 2009 and March 2010, slightly slower than the increase of 6.2% (12.8% annual rate) for the previous six months. Meanwhile, the Coincident Economic Index (CEI) for the U.S. rose 0.1% in March, 0.1% increase in February, and no change in January. The Lagging Economic Index (LAG) grew 0.2% in March, following a 0.1%increase in February, and declined -0.3% in January.
That is good news according to John Silvia, Chief Economist at Wells Fargo Securities Economics Group writing in a newly released report entitled, “Character of Recovery II: Differences Persist”  is that while industrial production fell sharply in the recession the recovery which began last June is more robust than in the past seven recessions he studied. He said that the March Institute of Supply Management, one of those closely watched leading indicators, showed expansion in orders, production and employment along with longer delivery times suggesting spending on more durable goods. Over the first three months of 2010 manufacturing overall grew 8.7% and high tech spending was up double digits. Taken together the durable and longer term nature of spending suggests the threat of a double dip recession has abated.
Real manufacturing and trade sales are OK tracking the pattern of the past seven recoveries even though they are below the historic trend lines. The reasons are thought to be the deleveraging going on across the economy and the real or self imposed limitations of credit. Wells Fargo Economics’ forecast of 2010 real final sales growth is less than 2% compared to the pre-recession 2.5% in 2007 caused primarily by the drop in consumer spending.
Jobs growth remains the ugly spot in the economic prospect reports and here the demographics of the employment base do not necessary help since the US has had an oversupply of low and semi-skilled workers and become much more dependent on H1-B visa required science, math, engineering and quantitative talent for software and high tech jobs. This is different form past recoveries when is a less high tech market with more manufacturing jobs we produced more of the talented skills we needed. This supply and demand imbalance is a problem—big problem—going forward for the American economy and argues for a different approach to immigration to make the US more attractive for the skilled talent we need even while we manage the influx of low skill workers to create a sustainable balance. The impact on today’s recovery of this demographics change is that those unemployed will likely stay that way longer than the historic trend and when the market demand for high tech skills rebounds at a faster pace those workers with such skills will be in big demand.
So more than 40% of the work force of the typical utility including all those focused on smart grid deployment are approaching retirement age in the next five years. The good news is this provides a good opportunity to update the work force skills needed for the smart grid future as replacements are sought and we do have a younger overall demographic profile than many other countries including China. The bad news is there may not be enough of those new skills to go around when we need them most because we do not train enough high skilled workers for the digital transformation of our energy industry let alone our other high tech needs. From electrical engineers focused on power flow analysis, to software developers and data analysts for the tsunami of smart grid data coming our way, to applications developers and product managers to turn geek speak into simple English so that customers can turn “Huh?” into “Ah-Ha!” Work force readiness is a big problem not just for utilities but the entire technology sector. Smart grid technologies increase the demand but do nothing to improve the supply of talent needed to effect this transformation.
Our immigration laws are not our friend because they constrain our talent base (remember the hassles getting H1-B visas in the last boom period?) and our economic competitiveness is likely to weaken if the cost of the current entitlement programs like social security and Medicare fall on a smaller workforce of lower wage workers for the twenty years or more it will take for the Baby Boomer wave to pass. This is especially true if we don’t do something to reduce our looming national deficit.
The consequence of slow jobs growth in the period ahead will make this talent deficiency more acute and the practical impact is that we will become more dependent on other countries for the technical skills that have traditionally driven American’s economic competitiveness. The answer is to make America a magnet for high tech skills, well educated foreign workers eager for the American way of life, and to reinvest in science, math and technology training at the University and high school levels to build into our workforce readiness need on the horizon.
 Wells Fargo Economics Groups, April 19, 2010. Get the reports at: https://wachovia.mworld.com/Econ/alerts.asp