The cost to provide a University of California education is lower today than it was two decades ago, a result of educational efficiencies made by UC in response to reduced state funding.

That’s the conclusion of a report to state lawmakers, which details the university’s costs, on a per student basis, for undergraduate and graduate instruction and research.

The report shows that per-student expenditures were about $5,500 lower in 2012-13 than they were in 1990-91, when UC spent about $22,390 per student. By 2012-13, per student expenditures had dropped to $16,890.

“As the state’s contributions to UC have diminished, we’ve become more efficient at how we deliver a world-class education,” said UC Chief Financial Officer Nathan Brostrom. “Some of those efficiencies have brought improvements to UC operations, but not all of them are positive.”

Student-faculty ratios have risen, for example. Faced with tight budgets, campuses have deferred faculty hiring, with 2011-12 and 2012-13 marking the first time in UC history that more faculty separated from the university than were hired.

Meanwhile, UC has continued to increase enrollment in response to California demand. The result has been a slow upward creep in the student-faculty ratio, Brostrom said.

The other big impact from reduced state funding has been on students.

“Students are paying a significantly larger portion of the cost through tuition, even though the overall education expenditure has gone down,” Brostrom said.

“UC is one of the best investments the state can make in its people and its economy, but it needs additional state resources if it is to remain affordable, accessible and of the same high quality that it is today.”

UC produced the expenditure report in response to a new state mandate that requires that UC, California State University and California Community College system to delineate their educational expenditures by student level and discipline.

The university had been providing the legislature each year with a report on its average expenditures for instruction. That report used a methodology that aligned with how UC is funded, and which had been developed by UC, CSU, and CCC, the California Postsecondary Education Commission.

UC’s budget office had to develop new methodologies to meet the reporting requirements. Brostrom cautioned that there are inherent limitations to the data, given UC’s complexity and the decentralization of its 10 campuses.

“Instruction, research and public service are inextricably tied together at UC, and all are an important part of the educational experience,” Brostrom said. “Faculty often teach courses and conduct research at both the graduate and undergraduate level, for instance.”

That commonplace scenario makes it extremely difficult to disaggregate costs between undergraduate and graduate instruction, he said.

The state used to fund UC on a per student basis. That practice ended in the 1990s when the state began allocating UC funds on an average student basis, using a single number for both undergraduate and graduate students. UC’s cost reporting methodology followed suit.

University officials say that using a cost-averaging method gives a more realistic picture, given how entwined research is to the educational experience at UC for both graduate and undergraduate students.

UC surveys its undergraduates every two years to ask them about their UC experience. In its most recent survey, 85 percent of respondents said that attending a university with world-class researchers was important to them; and 60 percent of senior undergraduates had participated in research activities as part of their coursework.

“Students come to UC to learn from and work alongside faculty who are leaders in their academic discipline,” Brostrom said. “It’s a hallmark of what makes UC unique among the state’s system of higher education.”

Per-student average core fund expenditures for education

Average inflation-adjusted resources per general campus student.  Excludes financial aid and UCRP funds.

UC’s statewide impact

• UC promotes social mobility: Forty-two percent of undergraduates are Pell recipients (family income of $50,000 or less). They have six-year graduation rates comparable with those non-Pell recipients (82 percent to 84 percent), and the majority earn more than their families five years after graduation.
• UC undergraduate graduation rates continue to improve: Four-year freshman graduation rates have increased 17 points to 63 percent and two-year transfer graduation rates have increased 18 points to 55 percent in the last 12 years. The six-year freshman graduation rate is 83 percent and the four-year transfer graduation rate is 86 percent.
• UC produces the largest proportion of STEM degrees in the state: UC provides 39 percent of all STEM degrees in California (both undergraduate and graduate), compared with 33 percent for the California State University and 29 percent for private institutions.
• UC tops global and national rankings: UC Berkeley is ranked third internationally by the Shanghai rankings of all universities, and three other UC campuses appear in the top 20; no other public universities are ranked in the top 20.  In U.S. News and World Report’s rankings of top U.S. public universities, six of the top 11 are UC campuses.
• UC degree recipients contribute to California’s workforce: Bachelor recipients work across California industries, particularly health care, education, engineering and manufacturing. STEM graduates are concentrated in engineering services and manufacturing. Professional programs prepare graduates for careers in business, health sciences and law.
• UC benefits California’s economy: UC annually generates about $46.3 billion in economic activity in California and contributes about $32.8 billion to the gross state product (the value of all goods and services produced in the state). Every dollar a California taxpayer invests in UC results in $9.80 in gross state product and $13.80 in overall economic output.   UC attracts about $8 billion in annual funding from outside the state.
• UC contributes to state’s health care system: UC’s five academic medical centers prepare future generations of health professionals, while serving as the state’s fourth largest health care delivery system, providing half of all transplants, treating low-income or uninsured patients, and serving as California’s Ebola health care centers.

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