Thursday, October 2, 2014

After the Freeze: UC Privatization since 2012

Talk delivered by Amanda Armstrong at the Oct. 1 Berkeley Faculty Association panel, "The Operation of the Machine: UC Then and Now."

I’m going to be talking today about the operation of the UC machine then, versus its operation now. But not then as in 1965. More like then as in 2009.

I still have vivid memories from fall 2009—a semester when students, workers, and professors built assemblies, walked out of classes, and took direct actions to challenge austerity measures being imposed by the newly-appointed UC President, Mark Yudof. These austerity measures included a 32% tuition increase, furloughs for faculty and staff, and layoffs of over 2,000 service workers across the UC system.

At one of the first walkout planning meetings I attended that fall, people were talking about something called the “Meister report,” which I later learned was named after its author, UC Santa Cruz Professor Bob Meister. The Report talked about how UC administrators were able to take out low-interest construction bonds because they essentially pledged to Moody’s and other rating agencies that they would raise student tuition if necessary to pay back the bonds.

The Meister Report challenged the official story of the 2009 tuition hikes, which claimed that the hikes were necessary given the state’s defunding of public education. The report suggested that, in hiking tuition so drastically, UC administrators weren’t only making up for state defunding – they were also showing bond rating agencies that they had the political will and capacity to deliver steep fee hikes if necessary. And they were protecting their ability to carry on with construction projects, even if this meant trimming funds for basic instruction and saddling students with more debt.

In this way, the Meister Report opened up questions about how and in whose interests UC administrators were managing the money they did have, and about why so many construction projects were moving forward even at a moment of financial crisis. 2009 was thus defined by the politicization both of UC real estate development and of rising student debt levels; it was also a period of significant political mobilization. Even so, we did not succeed in stopping the fee hikes, or otherwise reversing austerity on a large scale. There were some minor victories though: at Berkeley, some of the demands of those who occupied Wheeler Hall on November 20th were realized. The University renewed its essentially no-cost lease to the Rochdale co-op, and a number of custodial workers who had been laid off were rehired.

The larger political victory came in 2011 and 2012. Facing another round of steep fee hikes, students linked their organizing against privatization to the larger occupy movement. We set up encampments on the campuses, and, after acts of police violence, held massive strikes at Berkeley and Davis. The movement broadened through the spring, with people in all sectors of education marching to the capitol building in Sacramento and occupying it, in order to build support for progressive taxation and for the refunding of public education and social services. Ultimately, a ballot initiative for progressive taxation passed and, with guarantees of more state funding, the regents agreed to freeze in-state tuition for at least four years.

Since the political victory of 2012, some things have changed. In the aftermath of the in-state tuition freeze, the priorities and practices of UC administrators have mutated somewhat, which, I want to suggest, presents an altered political context, and some ambiguities, for those of us interested in challenging University privatization. To begin to get a sense of this new terrain, we can look at recent bond rating reports and UC financial documents.

This year, two rating agencies, Moodys and Fitch, downgraded the UC’s bond rating. In explaining their decision, Moodys noted that, while “The university's debt doubled over the last eight years,…. Political and public scrutiny of the rising cost of higher education will constrain UC's ability to grow net tuition revenue.” They continued: “The university's relatively low cost compared to other market leading universities and expansive geographic draw of students help offset these pressures.” In other words, UC administrators aren’t politically able to raise enough tuition revenue to offset their debts, but at least they can make money on out-of-state tuition, and maybe sometime soon they’ll be able to raise in-state tuition as well.

These bond rating reports, in addition to vindicating Bob Meister’s analysis from 2009, help clarify and explain a couple strategies recently undertaken by UC administrators—strategies that are spelled out fairly explicitly in UC’s financial documents. First: In the absence of a political context conducive to across-the-board tuition hikes, administrators have nevertheless tried to increase tuition and fee revenues by admitting more out of state students and by increasing other costs students have to pay (including for housing and healthcare). And Second: In an attempt to decrease their debt levels, administrators have begun to aggressively promote the privatization of development. Instead of generally taking on debt to construct buildings themselves, they are now often working to rent out university-owned land to developers who are willing to build, and in some cases manage, dorms, labs, and other facilities.

In what follows, I will discuss these two administrative strategies, as well as some of their possible political implications.  

First, on UC administrators’ recent attempts to salvage tuition and fee income. This really varies by campus, and I’m going to focus mostly on Berkeley. Following the crisis of 2009, Berkeley administrators started actively recruiting out of state and international students, who paid more in tuition. In the last couple years, as the cost of out-of-state tuition has risen to almost three times that of in-state tuition, administrators continued to admit progressively more out-of-state students. Last year, a third of new admits came from outside of California.

Like other public universities, Berkeley has started “leveraging” student aid to compete to enroll higher-income, out-of-state students. The new Middle Class Access Plan, the cutoff for which was just raised to include those from families making up to $150,000, leverages relatively small grants in exchange for the higher return of out-of-state tuition revenues. Berkeley has also selectively increased housing costs since 2012, raising rents dramatically on the most desirable housing options, while keeping other rents relatively flat. This follows a period of dramatic rent hikes; between 2001 and 2011, room and board rates nearly doubled. Finally, as part of the restructuring of SHIP in 2013, Berkeley raised healthcare premiums by thirteen percent for undergraduates and twenty percent for graduate students—a cost increase that mostly falls on grad students in professional schools, whose tuition rates have also continued to increase.    

Thinking politically about this situation, it’s worth saying initially that a politics organized around the principles of racial justice, class equality, and affordable public education remain critical. Since 2009, the admission and enrollment rates of black students have declined even further than in the immediate aftermath of Proposition 209. Over this period, the class composition of the student body has also been shifting; there are relatively fewer low-income students but significantly more from the highest income brackets. Since 2001, the costs borne by all students have continued to rise, even for those receiving the maximum support from Pell Grants and the Blue and Gold plan. For these and other reasons, it’s critical that we continue to target the race and class exclusions that are only becoming more entrenched in the admissions process.

But I think we also should be thoughtful about how politically to address the fact that the bulk of new tuition and fee revenues has been coming from out-of-state and international students, who now make up a greater percentage of the student body and have the potential to take on a greater role—as either protagonists or antagonists—of any student movement against privatization that might reemerge. Perhaps advocating for across the board rent and tuition reductions, including for out-of-state tuition, would be a generally compelling way to address affordability issues, which would push back as well against UC administrators’ post-2012 strategy for increasing tuition and fee revenues.   
The second post-2012 administrative strategy concerns the privatization of development. In June 2012, right around the time the Regents announced that they would freeze in-state tuition if Proposition 30 passed, Berkeley housing administrators announced that, in order to limit their construction-related debt, they would begin seeking out private developers to build new dorms. This kind of privatization of dorm construction had been happening for some time at Irvine and Davis. And Berkeley had done something similar with the Blum Center, as well as in partnering with BP to fund the construction of the Energy Biosciences Institute building on Hearst and Oxford.

Just in the last couple of years though, the privatization of construction has significantly intensified across the UC system. The UC Office of the President recently posted on their website documents outlining the various partnerships, or rent agreements, the campuses are looking to make with private developers. At Berkeley, housing administrators announced that the Martinez commons would be the final dorm funded and built in-house, and they recently leased Bowles Hall to a private entity interested in redeveloping the building. They are working now on finding a developer interested in building and managing a new dorm on Ellsworth and Channing. The Berkeley rent stabilization board has expressed concern that such privately developed and managed dorms could further drive up student rents, especially when other privately-run dorms, such as the newly-constructed Metropolitan on Dana and Durant, charge rents higher than the cost of room and board. Construction workers’ unions have also raised concerns about the fact that, unlike building projects on campus, these development projects won’t be bound by state prevailing wage laws, and so could involve more dangerous and exploitative building practices.

UC Berkeley administrators have also been working to make arrangements with private firms for the development of portions of the Gill Tract, in Albany. So far, the efforts of Occupy the Farm have stalled this development, and have put on the agenda the conversion of the Gill tract into space for community-based farming, research, and education.

Berkeley administrators, including the newly appointed Vice Chancellor of real estate Robert Lalanne, are also working on coordinating a massive development project on 109 acres of land owned by the University in Richmond Bay. They are saying this project will involve private construction and management of some of the research facilities, and recently published an “Infrastructure Master Plan,” outlining ways for private companies to buy space and influence at the Richmond Bay campus. 

A coalition of labor and community groups has issued a number of demands around this development project including the payment of prevailing wages to construction workers, the promise that all service workers employed in the facilities will be represented by AFSCME, the opening up of space for community-based and community-driven research, that those profiting from the project help fund affordable housing in Richmond, and that formerly incarcerated people be hired for some of the construction and other work set to occur. These are demands that students and workers on campus can help amplify. And in general, I think it’s imperative that we respond to UC’s efforts to privatize construction by building relations of solidarity with local communities and making the case for a kind of public knowledge making.

I can imagine some ambiguities and difficulties that might accompany such a project, aside from just the myriad practical challenges of coalition building and of building power sufficient to interrupt administrative agendas. It might also be hard to know when to oppose new development outright and when to try and direct it to less damaging, more accessible and public-oriented ends. And there’s a question as well about federal research money, which is public in one sense but is often linked to military or other state interests. In a power-point presentation last spring, Robert Lalanne, the Vice Chancellor of real estate, noted that drone development and testing is part of the research agenda for Richmond Bay. Given the entailments of much federal research, how can we envision and struggle for a kind of public knowledge making that is resolutely anti-militarist?

Any renewed movement against university privatization will need to work through these ambiguities and difficulties. But if the last six years have shown us anything, it’s that concerted action on the part of students, workers, and instructors can fundamentally shift the operations of the university, and can block the worst effects of university privatization, if not reverse this process outright. So there is reason to try, and to hope.


  1. Since the political triumph of 2012, a few things have changed. In's the in consequence state educational cost solidify, the needs and practices of UC managers have changed fairly, which, I need to recommend, presents a modified political connection, and a few ambiguities.