THE CONTROVERSY over compensation at the University of California conflates two issues. One is how much to pay senior management and faculty. The second is accountability in the way that pay is determined and disclosed. Although most of the attention is on disclosure, the more critical issue is whether the state of California is willing to invest in retaining and recruiting the finest faculty and administrative talent in the country.
I joined the university as dean of the UCLA School of Law in 2004, after having spent 17 years at private universities in the East, most recently at New York University. I can attest that universities -- private and public -- operate in a market. In order to recruit the best faculty and administrators, competitive financial packages must be offered.
Indeed, when UCLA recruited me, I was offered housing assistance. Although this assistance was reported in recent audits of UC compensation and drew the attention of the media, it was no more valuable than what my former employer had offered. If UCLA had not been able to allow me to at least maintain my standard of living, I would have found it very difficult to accept the position as dean.
Most university faculty members and administrators are not primarily motivated by money. We love teaching and doing research and working in an intellectually stimulating environment. Nevertheless, no matter how wonderful the environment at UCLA, UC Berkeley, UC San Diego or UC Santa Barbara, if compensation in the system lags behind the market, top scholars and administrators will go elsewhere, and UC will lose the people who make it one of the greatest universities in the world.
Since the adoption of the 1960 Master Plan for Higher Education, the state's financial commitment to the growth of the UC system has paved the way for California to become the greatest state in the nation. UC faculty and students have made trailblazing scientific and medical discoveries, pioneering the Internet, devising new treatments for AIDS and cancer and much more.
The university is the largest generator of new patents in the nation, and its 10 campuses, three national laboratories and five medical centers are major economic drivers in their respective locales. At UCLA, for example, the university estimates that for each $1 of taxpayer investment, the university generates almost $9 in economic activity, resulting in a $6-billion effect on the Southern California region. UC San Francisco has spawned more than 60 biotech and life sciences companies -- firms that in turn have created about 25,000 Bay Area jobs.
The compensation controversy is covering up the real UC scandal: The system is at risk because of disinvestment by the state. In 2001, the state provided more than 60% of the core funds for the university. That share fell to 46% this year. This -- and not competitive compensation -- is why more of the costs of education have to be borne by students. For example, in the last five years, students in the professional schools such as law and business have seen their tuition and fees go up by 120%, reaching more than $25,000 a year. At the undergraduate level, fees have increased nearly 67% over the same period. Compare this with the preceding five-year period, when student expenses went up between 2.5% and 6%.
Private fundraising has taken up some of the slack, but that support has not been sufficient to enable the UC system to keep up with the added burdens of the state's growing population and the increased expenses affecting all institutions of higher education.
As the UC regents enact reforms in the wake of the compensation controversy, they should be careful not to throw out the baby with the bath water. The state needs to be clear about the costs of maintaining a great university like the UC system. It must create a transparent, accountable pay system. But it also must maintain enough flexibility to negotiate, and win, when it comes to hiring the people who do the most to keep the university competitive.
And the public and the state must recommit themselves to supporting the one institution most responsible for California's achievements. If we value the state's young people, its future and its economy, the creeping disinvestment in the UC system must stop.