With the steep budget cuts of the early 1990s, the University of California entered what for it were the uncharted waters of charging special, higher fees to students who enroll in its professional schools. Though such fees were instituted beginning in 1994, the University is still having trouble implementing them, as evidenced in February when the UC Regents were asked to approve new professional school fees for the 1996-97 academic year. Though the concept of professional school fees wasn't at issue, the difference in fees by discipline was.
"Two thousand dollars more for a law student than a med student? Why?" asked Regent Leo Kolligian, referring to the $6,376 in special fees that UC law students will pay next year, as opposed to the $4,376 that medical students will pay. Meanwhile Regent Roy Brophy wanted to know why entering veterinary medicine students at UC Davis should be asked to put up $4,000 in special fees when the starting salary for a veterinarian is a fraction of that paid to medical doctors. Third, there were objections to special fees for nursing students, which will begin next year at $1,500 per student, and rise to $2,500 three years later. In the end, the Regents' reservations were strong enough that the new fee schedule made it out of the Regents Finance Committee by a bare 7-5 vote. (The vote the board took also addressed another item of concern to them, as well as to many faculty: that of raising fees for non-resident graduate students. Next year such fees will total $13,029.)
The Regents vote was in large part an affirmation of a fee policy they first approved in 1994, though they did take action on new fees as well (for optometry and pharmacy in addition to nursing). Nevertheless, the questions the Regents raised are indicative of the uncertainty that exists at UC not only about the level of the fees across disciplines, but about the rationale for the fees in the first place.
UC's professional school fees were a product of the drastic state budget cuts of the early 1990s -- and of the University's realization that these cuts were unlikely ever to be made up by the state. The move toward the fees had considerable support in Sacramento; the Legislative Analyst had proposed such fees for years and Gov. Pete Wilson in 1993 recommended privatizing one or more of UC's law schools. With these factors as underpinning, the driving force behind the actual change to the fees seems to have been UC's chancellors, who saw the fees as a way of maintaining quality within at least one segment of the University. State support for higher education seemed likely to decline in the long run; here was a way of allowing discrete segments of the University to maintain quality by moving in the direction of paying their own way.
The January 1994 Regents item that first proposed fee increases set forth a host of criteria that were to be taken into consideration in setting fees, but the most important of these has turned out to be the average fees charged by "comparable public and private institutes for each specific program." In practice it is comparable public institutions that have been used as the comparator, since the professional fees charged by private schools could not be justified at a public institution. Stanford Medical School costs $24,375 a year, while the four public medical schools in UC's "comparison-eight" grouping charge an average of $12,214. As a result, in setting most professional fees, UC leans heavily on the rates charged by the comparison-eight publics.
Nowhere in the original Regents' criteria, however, is there any mention of taking into account the salaries professional school students will make once they graduate. Officially, then, this factor is irrelevant to setting fee levels. "The fees were never set on that basis," says UC's Director of Budget, Larry Hershman. "They were set in relation to other schools."
Whether salary considerations or other factors should be considered is, however, an open question, not only to some Regents, but to some faculty and professional school deans as well. An argument about fees from first principles goes like this: Schools have been selected for these fees at UC because they carry the label "professional," but not all professional schools are required to charge them -- public health and social welfare programs are exempt, for example. Meanwhile, many of the schools that do levy the fees are no more "professional" in a meaningful sense than schools that are exempt, such as engineering. Employing criteria such as future income or societal need provides no clear rationale for the decisions UC has made either. Nurses are needed by society as much as engineers, the argument goes, and they're likely to make less money.
Frederick Murphy, the dean of UCD's School of Veterinary Medicine, is persuaded by the future income argument in connection with his students. "We've been on record as saying that we're against any increase in fees," for the Davis vet-med students, he says. The starting salary for a veterinarian, he says, is about $30,000-32,000 per year; meanwhile, a student who enters UCD's vet-med school next year might have to pay as much as $33,000 in regular and special fees prior to graduation. "You have to ask what that means to a young person starting out in life," Murphy says. "It's like, instead of having one mortgage, you have two."
To be sure, financial aid figures significantly into the debt burden taken on by many professional school students. The Regents' 1994 policy calls for at least one-third of the revenues produced by the professional fees to be set aside for student financial aid and, like other programs at UC, the Davis vet-med program has adhered to this standard. In another discipline, law, the question of future salaries has entered through a kind of back door: at UC's law schools, graduates who go on to practice in low-paying public-service positions have a portion of their student loans repaid by the school during their period of public-service employment.
Whatever fee reductions of this sort may be carried out, the question of setting fees in the first place is still conditioned most strongly by comparisons that are made between UC's fees and those of its public competitors. That this factor does not completely control fees, however, is evidenced by the situation in UC's medical schools. Entering UC medical students will next year pay $9,043 in fees ($4,376 in special fees and the balance in regular fees). By contrast, students at the four comparison-eight public institutions are this year paying an average of $12,214 in fees. Meanwhile, in law, business and veterinary medicine, UC's fees will approach or exceed those now charged by the comparison-eight publics. UC medical school fees are scheduled to rise further, going up another $2,000 by 1998-99. But next year, UC's medical school fees not only will be lower than the competition's, they will be lower than the fees charged at UC's own law and business schools by about $2,000.
This comparison, which so disturbed some of the UC Regents, provides a window onto the forces at work in shaping UC's fees. UC's professional schools are now walking between two worlds: they remain state-subsidized public programs, yet they are increasingly expected to make their own way. Doing this means they must enter to some extent into the realm of entrepreneurship and free-market competition. The reason that law school will cost more than med school at UC next year is that the law schools have more to gain by entering this new realm quickly.
The cost of educating a UC law or business student is about $15,000 to $17,000 per year, while the cost of educating a medical student could be estimated at anywhere from $35,000 to $50,000 per year, depending on what students are put into the mix, according to UC's Budget office. Thus, for a business school, a $6,000 fee will recoup more than a third of the cost of educating each student, while the same fee would recoup at most a sixth of a med school's per-student cost. The importance of fees to medical education drops even further in light of the large amount of research and clinical money that flows into medical schools. In setting the fee levels, medical school deans reportedly argued that steeply increased fees might cost them more in good students than it would gain them in funding. Several law and business schools, conversely, were keen to ramp up the fees quickly.
Pure financial considerations are tempered greatly by another factor at UC as well: the desire to keep the institution "one great university" with a single standard of quality across the campuses. In the era of professional school entrepreneurship, this notion runs head-long into the fact that UC's schools differ greatly in their marketability. The Regents originally anticipated allowing campuses to charge different fees for the same degree, but thus far there has been but a single exception to uniform fee levels: UC Riverside's Graduate School of Management has been allowed to charge only $4,000 next year, as opposed to the $6,000 being charged at Berkeley, Davis, Los Angeles and Irvine. Even this difference will eventually disappear, however, as UCR will raise its fees to match those of the other campuses by 1998-99.
In deciding in 1994 on uniform fee levels, then-President Peltason followed the advice of the Senate's Academic Council, which recognized a value in a flexible fee schedule, but saw an even greater danger in it.
"I think it's essential that the fees be uniform," says Roger Anderson, the current chair of the Senate's University Committee on Planning and Budget. If this were not the case, he says, better-funded schools might successfully argue for enhancements in lots of measures -- administrative budgets, space allotments, and faculty salaries, for example. Differential fees, in other words, could be a prescription for programs of a fundamentally different character on different campuses. And once that happens, the concept of a single university, with a single standard of quality, becomes very strained, at least within the professional schools.
Against this, there is a cost to be paid for uniformity. William Pierskalla, dean of UCLA's Anderson School of Management, says that location within a major metropolitan area is an important factor in the marketability of an MBA program. UC Davis and Riverside, he points out, don't lie within such areas and thus may always attract fewer applicants than UCLA or Berkeley. The idea of keeping fees uniform, he says, "is not a very realistic concept in this kind of context." Uniformity likewise trumped economic considerations this year when UC San Francisco reluctantly agreed to go along with UCLA in the imposition of nursing school fees. UCSF competes more directly for students with Cal State schools than does UCLA, and thus was cool to the idea of the new fee, but agreed to it in the end because of the principle of uniformity.
At the Regents meeting in February, Budget Director Hershman noted that professional school fees are intended to maintain the quality of the professional schools while "freeing up state funds that can then go to help the general campuses." Are both effects taking place?
With respect to effects on the schools themselves, to take one example, Berkeley's Boalt Hall will net just over $1 million from its special fees this year, once financial aid money is taken out. When the full $6,000-per-student fee is phased in for all Boalt students in 1998-99, that figure will rise to about $3.2 million per year, according to Boalt administrators. At UCLA's Anderson School of Management, meanwhile, the comparable figures are about $1.2 million this year and $2.5 million in 1997-98. What are the schools doing with the money?
"What we've been doing with it so far is to apply it directly to student services, so it's clear that it is related to the needs of the students who fund it," says Boalt Dean Herma Hill Kay. Student counseling, the law library, Boalt's clinical program and career services have all benefited from the funds, she says.
Anderson's Pierskalla says "We're investing most of it into programs that have been sadly depleted over the years. "The VERIPs took a heavy toll on the school, he says, and thus it has hired some lecturers and visiting faculty, but no ladder-rank faculty (though this is allowed under the Regents' fee policies). And, as with Boalt, student services have been improved with the money.
But what about the second part of the rationale for the fees? Do they help the general campuses? The Regents' original policy item made no mention of reductions or "offsets" to professional school budgets based on the fee enhancements they would be getting. In line with this, administrators at several professional schools -- Boalt and Veterinary Medicine at Davis -- say they're confident that they have not suffered such budget reductions, either in the form of explicit cuts or a lack of budget enhancements imposed by chancellors. To the extent that this is true across the system, professional fees could not be helping the general campuses.
This situation seems likely to change, however, if President Atkinson goes forward with his proposal to modify the financing of professional schools. Under the president's plan, schools that levy the special fees would no longer receive funding for enrollment growth and they would get no price increase money for anything other than salaries. (See related story on the President's proposed budget changes) Assuming a zero-sum game in campus budgeting, the money saved through this plan would end up on the general campuses. Such a scenario would obviously undercut the effect the fees were intended to have, however, which is to enhance the quality of UC's professional schools. Gary Schultz, the assistant dean for administration at the Davis Veterinary Medicine School, says that "over the period of a decade or so, this would eat up all of the [fee] funds."