Bad News for the University of California

The LA Times reports that Proposition 30 in California is now likely to fail.   The University anxiously sits in a holding pattern waiting to know whether the dedicated revenue that this tax increase would provide will arrive.  If this Proposition fails, then all hell will break out and tuition could rise by 20%.   The quality of education is likely to suffer.   While I have no “inside knowledge”, I have been concerned that the University has had  an incentive to only slowly adapt to the changing fiscal realities because if it is too pro-active this would be “rewarded” with even larger state fiscal cuts.  If University fiscal folks anticipate full crowding out of any privately raised funds, then why devote great effort to change the university’s revenue sources?

Why are tax payers unwilling to support the children?   One possibility is low trust in government.  If Governor Brown could commit that the $ raised would not go to “high speed rail” but would be spent on education, would that increase political support?  Do opponents not like the prioritized public goods or do they believe that government is too inefficient in spending collected revenue?  How is trust in state and local government built?  Another possibility is based on Jim Poterba’s work from long ago.

Switching subjects:  For those who like youtube videos about environmental economics, my new series may interest you!   The good news for you is that the videos are short and you don’t see my face!

Author: Matthew E. Kahn

Professor of Economics at UCLA.

14 thoughts on “Bad News for the University of California”

  1. Why are tax payers unwilling to support the children?

    Welcome to the Libertarian paradise; every man for himself.

    1. Yeah, sure — blame Libertarians. They’re such a majority after all, that nobody else has any influence at all!

      Taxpayers are willing to support children with education, K-12. What is the case for subsidizing students indefinitely?

  2. I’m sure your face is just lovely. As rude as I am sometimes about your posts, it is not because of aesthetic objections. Most economists just rub me the wrong way.

    I think trust is a huge problem, maybe the biggest chunk, but unfortunately many people don’t understand *why* the Legislature can’t do its job. It is a historical and legal problem, meanwhile hardly anyone reads a decent paper anymore, much less that California Crackup book (including me! haven’t read it yet. Too depressing.) Voters don’t understand that they themselves caused the problem, so they keep making it worse and worse. We need to get rid of Prop. 13, or at least do a split-roll. Democrats pay taxes too, we wouldn’t throw out the baby. And if the state GOP weren’t completely bonkers, with one or two exceptions, maybe something could get done.

    And yes, rampant libertarianism is to blame as well. Candy*ss mother*******.

    Poterba’s idea is a part of it too, though perhaps that is slowly changing as the electorate becomes less white and less elderly.

    1. Candy*ss mother*******

      Heh, coming from a Democrat, and aimed at Libertarians, this just broke my irony meter.

      1. No such thing as a free lunch. Civilization must be paid for. Try telling that to a Libbie. They are not interested. Most of them are really just people who care about money and taxes, not the “freedom” they talk about so much. It’s why they are able to hold their noses and vote for the women-hating Republicans. As you can see, I have very little respect for their philosophy. It’s okay to have a libertarian streak, but to go around calling yourself one? That’s something normal people grow out of in their 20s.

        But, if you are an exception, I apologize to *you.* It was a little bit foul-mouthed. But if you lived here in Cali, you’d know what I mean. There is a big streak of this even among Democrats and it is not a good thing.

  3. Trust in government didn’t “just” diminish. It happened through coordinated, concerted, and long-standing efforts of ideologues. At this point with an electorate with diminished capability for logical reasoning, it may not be possible to build that trust back.

  4. The deep skinny on Prop 30 was blogged by Harold Meyerson a while back:
    That’s a must read.
    Here’s the lede:

    America has the Koch brothers, and now California has the Munger kids. Unlike the right-wing Kochs, Molly Munger and her brother Charles Jr. entered politics from opposite directions—she’s a liberal Democrat and a champion of inner-city schools; he’s an economic conservative, a social moderate, and a Republican activist. But thanks to the vicissitudes of California politics and the self-absorption that wealth can bring (their father is Charles Munger, a Pasadena attorney and investor who is the longtime vice-chairman of Warren Buffett’s Berkshire Hathaway investment consortium), they’ve come together in the past couple of days to attack the most important measure on the California ballot: Governor Jerry Brown’s initiative to raise taxes on the rich so that the state’s schools and colleges won’t take a massive fiscal hit immediately following the election.

    That is what happens when you allow the existence of mega billionaires and their callous callous-free children
    The country needs a cap on individual wealth and a huge inheritance tax.
    Intense wealth is a disease. It’s a country-killer.

    1. Well, I think it would be easier to just ban paid signature gatherers. I hope that’s not unconstitutional yet. I am not against your other ideas, I just don’t see them happening any time soon. And I do believe Molly Munger’s intentions are quite good, and to her credit. She could just sit around on the couch and eat bonbons if she wanted.

  5. Well, if I were voting in California, my reaction would be that if they have the money for the Train To Nowhere, surely they have plenty of money for the schools. I do think it’s got a lot of trust aspect: you see these guys spending money on silly stuff, you don’t have any way to restrain them, you feel like lashing out at what you can.

    I am myself something of an argument for capturing the cost of the universities from their current students: I got a wonderful education at Berkeley, went East, and haven’t paid a dime of California taxes since.

    Another argument is the burger flipper in Lodi: why should his taxes to to make upper-middle class kids richer? State universities are a hugely regressive expenditure, if you look at who benefits.

    1. Re Train to Nowhere: 1) we don’t have the money yet, actually. 2) the design got completely bollocked up under the *previous* governor (though I bet the Leg appointed the idiots…). I was hoping Gov. Brown would un-bleep it, but he probably didn’t think he had time. 3) Maybe they should just start over. If it were done well, I’d think it was worthwhile.

  6. dave schultz, quite inadvertently, makes another important point: We are now as a culture far more transient than ever in history. People see no value in investing in communities where they’re mere sojourners, any more than people get their rental cars washed and waxed.

  7. Why is there never a statement in these types of articles from employees of the University of California about the massive administrative bloat in the system today. Why never a statement about the explosion in the percentage of the UC’s budget that goes to retirees in pensions and medical benefits. When will the University of California open itself up to a transparent accounting of how its spending has changed dramatically over the years?
    The University of California can’t ask taxpayers for more money until it gets its own financial house in order. Until the administrative bloat and faculty association golden parachutes get dealt with California voters will not embrace demands for more funds.

  8. Best Hope to Fix California Education: teacher faculty never-say-die spirit of more learning with fewer resources. “All you have to do is spend more (Prop 30, 38) on education” should be ignored as Prop 30, 38 do not serve our state’s school and university children. Additional money (Prop 30, 38) is not the magic elixir. We are kidding ourselves by believing that education funding shortfalls disappear with Prop 30, Prop 38.
    Prop 30, Prop 38 levy significant taxes on each one of us. The wounds that Prop 30, 38 are to heal have been self inflicted largely by our elected Sacramento politicians who simply do not say no to any influential interest group be they teachers, University of California (29% increase in salaries last 6 years), public employees business, or other unions or lobbyists.
    As election day approaches Prop 30, 38 are used by Sacramento politicians and lobbyists to blackmail us.
    Vote No on Prop 30, 38, 32. Save California education for our school and university children.

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