Taking Initiative

The UC Board of Regents passed a tax in July 2011 that may use student fees to fund the business affairs of the UC Office of the President. The tax, called the Funding Streams Initiative, has already been drawing from student funds at UC Riverside and UC Santa Barbara, but will not go into effect at UCSD until Fall 2012. The initiative aims to increase UCOP’s financial transparency, and while the tax was inevitable, student fees are for the students and should not be used to fund central university operations.

Previously, each university’s revenue was funneled to UCOP, which then took a 6-percent slice and redistributed funds back to each campus. Under the old system, student fees were not included in this revenue. UCOP will now be seeking the same funding through an across-the-board 1.69-percent flat tax. Each UC campus will be allowed to keep their revenues (with the exception of undergraduate financial aid) and instead pay the flat tax directly to UCOP. The purpose of the initiative is to “simplify university financial activity, improve transparency and incentivize campuses to maximize revenue,” according to a September 2011 letter by UC President Mark G. Yudof detailing the approval of the Funding Streams Initiative.

While the tax has the right goal in mind, it should not be drawn from student fees. Most student-initiated campus fees are meant to service the students, with initiatives such as building RIMAC, providing athletic scholarships and expanding Price Center to create Price Center East. When students place a referendum on a ballot, they aim to collect a predetermined amount of funding for a specific purpose. Students directly pay for the student-initiated referendums, and the taxation of such referendums is a perversion of their stated purposes. Students should reap the benefits of the measures they vote and agree to pay for, and not have to deal with hidden fees to support projects they are unaware of.

The A.S. Councils of UC Riverside and UC Merced released a November 2011 joint resolution of solidarity criticizing the inclusion of student-initiated fees in the Funding Streams Initiative. Jonathan Ly, ASUCM External Vice President and Keith Ellis, University of California Students Association Secretary, argued that “UC students should have the right to the funds gathered through the referendum to solely be used for its stated purpose.” However, the resolution to exempt campus-based fees from the UCOP tax was vetoed by the ASUCM President Miguel A. Lopez later that month. UC Merced Chancellor Dorothy Leland agrees that students should have the ability to choose and not be forced to tax themselves. To this purpose, UC Berkeley has abstained from taking from student fees. UCSD should do so as well.

As a result of this new tax measure, the UC Davis A.S. Council will have to cut an estimated $250,000 from its 2012-13 budget. The 42 percent budget cut may cause increased prices in the popular ASUCD Coffee House, Bike Barn and Educational Opportunity Program, or changes in the campus shuttle Unitrans and number of student jobs. In addition, UCSB Student Affairs currently owes UCOP $700,000, leading it to solicit its student council to contribute anywhere from $99,000 to $180,000 to fund UCOP by May 30. Consequently, the student council has frozen student org funds for an indefinite amount of time. It is clear that drawing from student fees has caused financial strain on the student councils of these UC campuses, and will undoubtedly affect UCSD’s A.S. Council in a similar fashion. 

A July 2011 report issued by the California state auditor found that while UCOP was not guilty of excessive spending, it failed to be specific in accounting for its expenditures. The state auditor found that UCOP only uses a single accounting code, “miscellaneous services,” to label over $6 billion of its expenditures for the five years that the audit covered. This means that roughly 25 percent of the university system’s annual public non-compensation expenses are basically unaccounted for. The report also found a significant discrepancy in the amount of funds distributed to each campus. To cite one example, in 2009-10 UCSB was allotted $12,309 per student, while UC Berkeley and UCSF received $17,010 and $55,186, respectively. UC Merced, UC Riverside, UC Santa Barbara and UC Santa Cruz were also found to have received less funding than they would have if each campus received the same amount per student.

While differences in funding among the campuses may exist because UCOP does not distribute all funding to campuses on a per-student basis, the new funding streams model will allow the university to identify and justify the reasons for any differences. Each UC campus does not have the same revenue sources, so the impact of the tax will be different for each campus. Some UCs have medical centers while others have more professional schools — these sources, many of which are fully privatized, should be taxed first. 

The tax is a win for transparency, and it is a plus that campuses will be given autonomy in retaining campus-generated revenue and choosing how to allocate their funds. However, the bottom line is that the tax should not touch student fees. Student fees are for the students.

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